I’ve been watching for this pattern to emerge. Insurance companies must offer insurance in disaster-prone areas otherwise they’re denied access to the rest of the state, but the old pattern of charging more to cover less is emerging. Some say it’s market forces at work, but insurance is one of those things that underpin the financial system. If insurance is not affordable, people won’t originate mortgages to build or buy in high rate areas. This kills real estate activity, which kills property values, which kills property tax revenue.
Drops in property tax revenue drive all kinds of bad behavior at the municipal level, from truly creative fines and fees in the courts and other revenue generating departments, to starvation of infrastructure maintenance and direct reduction of administrative and maintenance personnel.
The end result is really aggressive policing, infrastructure degradation and failures, accompanied by population flight triggering more declines in property values. It’s a vicious circle that can be triggered by lack of credit or lack of insurance. In this case, it’s insurance.
There are a whole lot of “new” disaster-prone areas. They are about to become ghost towns. Most people are asleep at the switch.
If you live in an area that has had more than two “500 year” events in the last decade, get out now. You’re about to be living in a ghost town.