This podcast assesses risk at the interface of insurance and real estate with Andrea Pelletier, Client Advisor and Agency Partner at Gulfshore Insurance. While much of the content relates to the industry in Florida, we also discuss why Superstorm Sandy’s transition to an extratropical cyclone saved homeowners money on their insurance deductible in New Jersey and New York.

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Transcript:

00;00;02;11 - 00;00;28;27
Hal Needham
Hey, GeoTrekkers, this is Dr. Hal, host of the GeoTrek podcast. If you've been listening to our podcast, you've picked up on the fact that we've really hit hurricane season hard this year. Hurricanes threaten millions of Americans with catastrophic wind and flood damage and can completely change how society functions in coastal locations. Many of our listeners who live in hurricane prone locations refer to life as before and after a major hurricane strike.

00;00;29;09 - 00;00;55;16
Hal Needham
We've taken you in the field with us on storm chaser for Hurricane Ian interviewed hurricane and resiliency professionals from Texas to Louisiana to Florida and gone deep with this topic from many different angles. We covered a lot of stories related to Category four Hurricane Ian in southwest Florida this year. And then last week, we featured interviews I recorded in Long Island, New York, to commemorate the ten year anniversary of Superstorm Sandy.

00;00;56;03 - 00;01;17;19
Hal Needham
This week's guest is perfect because she bridges the gap between Ian and Sandy. Andrea Pelletier is a client adviser and agency partner at Gulf Shore Insurance and based in Naples, Florida. I came across her as I was researching articles about Superstorm Sandy and then later found out that she's based in Naples, Florida, where Hurricane Ian inflicted widespread flood damage.

00;01;17;29 - 00;01;40;19
Hal Needham
Andrea works at the interface of insurance and real estate and has a lot of profound insights on these topics. You're going to get a lot out of this podcast if you have an interest in catastrophe risk, hurricane impacts, insurance, real estate, or just interested in maybe relocating to the coastline, especially in Florida. Proof that coastal real estate is booming despite the threat of storms.

00;01;40;19 - 00;02;00;27
Hal Needham
This is the fact that most Gulf Coast communities have been experiencing explosive population growth in recent years. You can hear some of that growth going on behind me in this podcast as a residential construction project is underway right outside of our studio in Galveston, Texas. Please bear with the occasional background noise of chainsaws and hammers in this episode.

00;02;01;07 - 00;02;22;25
Hal Needham
Hey, before we get into our conversation with Andrea, a bit about the podcast, Geo Track investigates the impact of extreme weather and natural disasters on individuals and communities. Our goal is to help you improve your decision making, risk assessment and communication related to extreme events so you can take action to make yourself, your family and your community more resilient.

00;02;23;07 - 00;02;42;11
Hal Needham
While we're doing some podcast housekeeping, we have a favor to ask of you. I'd really appreciate if you just take a minute to subscribe to this podcast on your favorite podcast platform. Your subscription helps us mark progress, which enables us to make more professional partnerships moving forward and ensures many more episodes of the track podcast in the future.

00;02;42;22 - 00;03;04;11
Hal Needham
Okay. Well, let's jump into this episode with Andrea Pelletier. If you're a student at heart, you may want to have a notepad handy. We cover a lot of insightful perspectives in this episode, and Andrea is great at teaching new terms and concepts. A more formal introduction of this week's guest, Andrea Pelletier is a client advisor and agency partner at Golf Shore Insurance.

00;03;04;20 - 00;03;30;27
Hal Needham
Having joined the team in 1990. Her experience and expertise in the Private Risk Services division enables her to offer a consultative approach in working with successful individuals and their families. Andrea is proficient in understanding her clients insurance needs, creating and customizing package insurance policy solutions in the areas of luxury homes, car collections, jewelry, fine arts, watercraft, and personal access liability.

00;03;31;09 - 00;03;58;25
Hal Needham
Andrea holds the chartered Private Risk and Insurance Advisor or CPA, RIAA and the Certified Professional Service Agent CPA designations. She studied business at IS in college and is a member of the Naples Area Board of Realtors and the Women's Council of Realtors. Andrea, so great to have you on the podcast. Andrea, thank you so much for taking time to come on the podcast.

00;04;00;13 - 00;04;02;24
Andrea Pelletier
You're welcome. It's nice to be here.

00;04;02;25 - 00;04;22;20
Hal Needham
It's great to talk to you because you work in this really interesting intersection between insurance and real estate and a lot of these hot topics right now that people are talking about, especially in the state of Florida where you live. Could you share a little bit about the perspective on the big picture of how insurance carriers may look at risk in the state of Florida?

00;04;22;20 - 00;04;26;08
Hal Needham
I know you live there, you work there. You have a lot of interesting insights on this topic.

00;04;26;29 - 00;04;57;08
Andrea Pelletier
Thank you. And I do think that it's very interesting. And one. One thing about insurance, especially being in southwest Florida, is that it is ever changing. And I'll just refer back to pre-Hurricane Ian. I mean, the markets were already concerned about wind and flood exposure, already becoming very conservative, experiencing some financial strain and we were seeing that on the insurance side as far as capacity and rates.

00;04;58;21 - 00;05;23;26
Andrea Pelletier
And then post and I it's a market I've never seen before. So, I mean, the big picture as far as what we're seeing right now, post end, is that a lot of carriers did not open up after the storm. There's a lot of reluctance to write in Florida. There are still a lot of unknowns as far as what kind of catastrophic claims the carriers are expected to see.

00;05;24;11 - 00;05;50;12
Andrea Pelletier
There's a lot of speculation there. But overall, in general, I mean, carriers are wanting to and have been for the last decade or two, really monitoring wind and flood exposure. And they use cat modeling. A lot of sophisticated underwriters will use wind and cat modeling to determine are they are they interested in insuring a particular property and and the likelihood that property is of sustaining damage after a storm.

00;05;50;20 - 00;05;59;01
Andrea Pelletier
So, I mean, the conversation has been there and I mean, obviously it's continuing to are continuing to evolve.

00;05;59;15 - 00;06;20;12
Hal Needham
Yeah. Andrea So Ian comes a lot of people don't realize how densely populated that area near Cape Coral, Fort Myers down to Naples. I mean, a lot of people got hit by this storm. So when you said that it's volatile, people are talking about, you know, with a lot of question marks and maybe uncertainty about what insurance will look like, what are some of the factors that people consider post.

00;06;20;13 - 00;06;45;07
Andrea Pelletier
Ian So I mean right now post Ian, it's mostly around the conversation is around claims rebuilding. So I don't know that really consumers have gotten past that aspect of their experience to really think about what is the insurance market going to look like down the road? I mean, there certainly are no shortage of families that still want to move to Florida.

00;06;45;16 - 00;07;03;20
Andrea Pelletier
And I'm surprised that the number of new business submissions that I've been getting. So it is true that that homeowners still want to move to Florida. And and I think that consumers are finding out in that space that there are very, very few insurance products that are available right now.

00;07;04;20 - 00;07;28;24
Hal Needham
That's really interesting. So it sounds like some of this even started before Ian mean, which is really interesting because in a way, from a climatological perspective, Florida has been quite lucky. There have been some really catastrophic storms that were near-misses like several years ago. Hurricane Dorian was a Cat five hurricane, just stalled out in the western Bahamas, not that far east from Fort Lauderdale and West Palm Beach.

00;07;28;29 - 00;07;48;24
Hal Needham
And there were a lot of close calls like this in recent years. So I was surprised to hear it's a different industry. Professionals say even despite a lot of the near misses Florida insurance was you know, I don't know if I want to use the word precarious, but there were a lot of challenges for carriers writing in Florida even before in.

00;07;48;24 - 00;07;51;03
Hal Needham
Could you share about what some of those challenges have been?

00;07;51;16 - 00;08;10;26
Andrea Pelletier
So there was a time in the not so distant past where Florida insurance was profitable. You know, as you said, we had a we were lucky. We had a lot of near misses. And I cannot tell you how many times that happened where, you know, every single year we'd have a number of storms, hurricane watch or warning approaching.

00;08;10;26 - 00;08;32;08
Andrea Pelletier
And it would it would go by and it was a nonevent year after year after year. And, you know, after Hurricane Andrew, you know, a lot of things happened after Hurricane Andrew, but we were definitely in an upcycle where rates were continuing to go up. Carriers were finding the market place profitable and writing business. So it was you know, the market was good.

00;08;32;08 - 00;08;58;13
Andrea Pelletier
The market a lot of carriers had come into the state willing to write new policies and then and then Hurricane Irma. So Hurricane Irma actually pivoted the market just a few years back. We were just to the five year mark after Irma and that really changed, I think, carriers willingness to want to write in Florida both from a, you know, hurricane claim filing standpoint and from a litigation standpoint.

00;08;58;13 - 00;09;23;19
Andrea Pelletier
So it was from Irma where we saw so many attorney fees come up as part of the insurance cost and in Flor Florida has 8% of the claims nationally, but we have 80% of the litigation. And so there's been some reform around that to try to to try to resolve some of those issues so that we have a healthier insurance market moving forward.

00;09;23;19 - 00;09;51;20
Andrea Pelletier
And I think it's critical, you know, for the for the real estate market, for the economy to have a healthy, sustainable insurance market. Now, that was all pre Ian, so, you know, so we were already struggling with carriers financial strength prior to Hurricane Ian. And I really think that is why, you know, since this last storm, which was obviously incredibly devastating, the marketplace just has not reopened.

00;09;52;08 - 00;10;13;21
Hal Needham
Yeah, that's really interesting. And Andrea, you really have a deep knowledge here of these different storms, how that changed insurance. Could we even go chronologically like, you know, we know Florida had this really hyperactive time of hurricane history in the twenties, the forties, the fifties, then like the seventies, eighties were really quiet and there was explosive growth in the state during those those years.

00;10;13;21 - 00;10;32;08
Hal Needham
There were actually no major hurricanes in South Florida in the seventies or eighties. Then in 92, Hurricane Andrew hits especially the southern part of Metro Miami as a Cat five hurricane. Could we kind of chronologically go into how things changed with Andrew and then kind of follow that through the time between Andrew and Irma and then talk about Irma?

00;10;32;08 - 00;10;37;05
Hal Needham
So I mean, what happened with with Andrew in 92? How did that change insurance and the market?

00;10;37;19 - 00;11;05;13
Andrea Pelletier
So those are my early insurance days, but I certainly was a Floridian at that stage, and it is my recollection that Andrew was more of a wind event prior to Andrew, that the insurance marketplace was extremely robust. I mean, we had a multitude of at best rated carriers that were writing in Florida, and rates were really competitive. I mean, they were comparable to any other place in the country.

00;11;05;13 - 00;11;40;05
Andrea Pelletier
So to and Andrew occurred to primarily hit the East Coast. I to my it's my recollection that was primarily a wind event which affects the homeowner insurance versus the flood of here on the on the southwest side of of south Florida. We you know we had a few claims but nothing like what they experienced on the on the east coast and after Andrew and it took a few years but systematically one carrier after another pulled out of Florida until we were left with primarily writing with citizens, which was the state pool and excess surplus lines.

00;11;41;19 - 00;12;16;03
Andrea Pelletier
That was when really the the the reinsurance market became much more prevalent in the floor in Florida, where carriers were really, you know, were more heavily relying on reinsurance companies. And so, you know, we we eventually got back on course with the help of the reinsurance markets. You know, as I said, we were writing with citizens and Lloyd's of London, but then a lot of Florida domiciled demo tech rated carriers started to emerge and all of those which, again, are Florida domiciled.

00;12;16;03 - 00;12;38;07
Andrea Pelletier
So they're only writing in Florida, which the cat state were supported by the reinsurance market. And at the time, the reinsurance carriers were happy to do it. They they they thought Florida was going to be profitable, and it was for many years. So we went from Andrew to, I want to say the next storm that was memorable to me was around the time of Wilma.

00;12;39;02 - 00;12;42;09
Andrea Pelletier
Then there was then, you know, I mean, Florida's had a lot of storms.

00;12;42;09 - 00;13;01;00
Hal Needham
You know, 2004, we had those four hurricane strikes, especially, remember Frances and Jeanne back to back on the East Coast. We had Charley in the southwest. We had Ivan in the Panhandle. I think that was another year where people's eyes were open. I have a question for, like you said, people got a little bit nervous with writing in Florida.

00;13;01;06 - 00;13;28;26
Hal Needham
As far as wind exposure after Andrew, was it a matter of how many wind claims that Andrew actually inflicted, or was it just the concept like, you know, because you got to Fort Lauderdale and North, there weren't that many wind claims. There wasn't that much in southwest Florida with Andrew. Was it the actual amount of losses and the actual amount of claims, or was it more the concept like, Hey, a Cat five hurricane could also hit Fort Lauderdale, you know, Fort Myers, all these other places.

00;13;28;26 - 00;13;31;10
Hal Needham
Was it more conceptual or actual losses?

00;13;31;11 - 00;13;57;22
Andrea Pelletier
Think I think that some of the primary factors were that the policies were not rate adequate. So carriers lost a ton of money after Andrew that they weren't getting enough rate and in order for them to get proper rate, but the buildings had to be hardened so that the the devastation that occurred because of the building codes and force at that time were were catastrophic and carriers weren't getting enough rate properties were underinsured.

00;13;58;12 - 00;14;24;23
Andrea Pelletier
The property language at the time had guaranteed replacement cost. So even though somebody was underinsured, they were still getting their house rebuilt to what it would cost at that, you know what it would cost it in real time for that for that at home to be rebuilt. So, you know, what happens in that standard market is that a carrier can't just go to the state and file for a $300, I'm sorry, a 300% rate increase.

00;14;24;29 - 00;14;32;08
Andrea Pelletier
So carriers probably weren't able to get the rate that they needed to stay in Florida. They didn't think it was going to be profitable. So many of them pulled out.

00;14;32;19 - 00;14;56;00
Hal Needham
When you say that the carriers couldn't get the rate increase, do you mean like if someone had a house that was valued at 200,000 during Andrew, but then the cost of rebuild was way more than that? Is it that the insurance is responsible to pay for that increased value? But they almost like they're in a loss, right, Because they're responsible to make people whole, but they can't necessarily jack up the rates all of a sudden.

00;14;56;08 - 00;15;26;13
Andrea Pelletier
Right. Right. And every contract is different. But there were some contracts at the time. So it was standard practice in Florida to write a homeowner policy with what you think is is the dwelling replacement cost at the time that you're writing the policy. But then there's a clause in there that that guarantees the home will be rebuilt. The way that it stands now with the eventual claim that policy language is the only a few carriers are doing that and they're very, very particular about making sure that the pumps are valued properly where they'd come out and do an inspection.

00;15;26;13 - 00;15;38;25
Andrea Pelletier
But a lot of the majority of the carriers are not using that policy language anymore. You can sometimes you can get a little bit of extra coverage, but that but the percentage is usually capped to like maybe 25% if you're lucky.

00;15;39;07 - 00;16;00;03
Hal Needham
But yeah, that makes a lot of sense. And like you said, I think it sounds like the carriers got nervous about not only the meteorological side of the wind exposure, but the the quality of construction, just how many assets, the amount of assets in harm's way. Right. I think at that time in 92, we started seeing the South Florida building code really changed post.

00;16;00;03 - 00;16;00;25
Hal Needham
Andrew Right.

00;16;00;25 - 00;16;27;22
Andrea Pelletier
I did, yes. So that so that, you know, so I think there was a lot of restructuring after Andrew both from a building code standpoint and then all of these, you know, demo tech rated carriers that were coming into Florida, you know, basically a restructuring on, you know, the Florida insurance marketplace because that those are the carriers, those demo check rated carriers insured the majority of properties, you know, over the course of the next few decades.

00;16;28;09 - 00;16;30;17
Hal Needham
Andrew, could you explain what you mean by demo tech?

00;16;31;11 - 00;16;48;22
Andrea Pelletier
Yeah, it's a financial stability rating company that we we rely on in Florida to rate insurance carriers because carriers that write just in Florida would otherwise not receive a favorable and best rating. So they rely on demo tech.

00;16;50;00 - 00;17;12;27
Hal Needham
And I see what you're saying. So that's really just within the state. And they need to have kind of rating with within the state is some of the concern there. I know a lot of carriers like to have geographic diversification where they're writing in a whole bunch of different places. So if there's a catastrophe in one area they don't go under, is some of the concern for people that just write in Florida that they may be taking on too much Florida risk?

00;17;13;11 - 00;17;35;17
Andrea Pelletier
Yes. Yes. And I think that carriers, even though they're just they're Florida based, will still try to write, you know, not everything on the coast they might want to write maybe, maybe more business in central Florida. And they usually diversify by writing, you know, other lines of business, maybe umbrella policies, valuable articles. I mean, there's not a lot of diversification there.

00;17;35;25 - 00;17;49;11
Andrea Pelletier
So, you know, a property insurance markets that are demo tech rated are really you know, they're the most exposed. I mean, there's no other way through the most exposed. They rely on the reinsurance markets and they're the most volatile.

00;17;50;04 - 00;18;01;06
Hal Needham
Andrea So what did insurance look like in Florida from Andrew to Irma? I mean, was it changing through that time? I know we did have the active years of 2004 2005. Were things changing a lot or were they pretty stable?

00;18;02;16 - 00;18;24;09
Andrea Pelletier
They, you know, markets were carriers were in and out of the market somewhat. I mean, the market was somewhat stable. I definitely noticed a trend with with new carriers emerging, especially in the high net worth space, which is where I primarily focus. I think I think there was a time there was a good stretch of time where Florida was profitable.

00;18;24;09 - 00;18;54;26
Andrea Pelletier
So more carriers wanted to get into the Florida and into the Florida business. But it's interesting because before Irma, even before Irma, but especially after Irma, I want to say I really started hearing underwriters concern around flood exposure. And that was really the first time I saw or heard, you know, this sort of undertone of it seemed to me that carriers were aware that we were due for a flood event, which is what we just experienced.

00;18;54;26 - 00;19;13;02
Andrea Pelletier
So I'm not entirely surprised of this of this storm and the devastation that it caused. But but at the same time, you know, were the carriers prepared? That's what I'm wondering, where the carriers prepared, because they're the ones that are going to have to, you know, sustain all these claims that are coming in.

00;19;13;02 - 00;19;23;12
Hal Needham
You talked before about modeling when carriers were inferring and implying that they had concern about flood risk. Was that more on the coast? Was it more inland rainfall, flood.

00;19;23;23 - 00;19;55;10
Andrea Pelletier
Coast, coastal? I mean, but it you know, some some of these conversations with underwriters. It's interesting how, you know, anyone in a flood zone, there was always a lot of scrutiny around it. And and particularly the the the coastal areas. In fact, at the county where I live, they went from a zero elevation requirement. So homes had to be built to a zero elevation requirement, which, you know, every every area has a flood zone and a base flood of baseball elevation requirement.

00;19;55;10 - 00;20;18;17
Andrea Pelletier
So historically, they had to be built, you know, to at least that base flood elevation requirement. And then our our city, which is where all the coastal properties lie, came in not that long ago, maybe maybe three years, three or four years ago, and said they wanted the new properties had to be built to a plus one. So I know that I forgot where the question what the question was.

00;20;18;28 - 00;20;24;28
Hal Needham
Yeah, really talking about the difference between coastal flooding inland, it sounds like you're saying coastal flood really got on the radar.

00;20;25;10 - 00;20;47;16
Andrea Pelletier
Yeah. So the carriers are definitely, you know, so so the flood maps and the county also were aware of the flood exposure and the carriers were aware have that have been aware of it and they were always seem to be wanting more than what the building code supported. So so yeah the carriers have been aware of these coastal exposures.

00;20;48;07 - 00;21;09;07
Andrea Pelletier
Were they still writing or are they still writing coastal properties? Yes, mostly newer, newer builds. Everything, you know, anything newer has hurricane impact windows. They always looked at the elevation and they found some that I guess modeled well, wind based on the wind and the flood cat modeling and they thought they could get enough rate to support that risk.

00;21;10;05 - 00;21;25;17
Hal Needham
Yeah, that's really interesting. Andrea, you mentioned how the carriers wanted, you know, obviously less exposure, less risk, higher elevations, better built buildings were there. Times are really what they're wanting is beyond the building or the elevation code.

00;21;25;17 - 00;21;44;16
Andrea Pelletier
Well, yes, because, I mean, I would say that some of the guidelines would say they wanted to build, you know, technically they wanted something to add a plus to elevation difference. And it's very, very rare to have a house like that. So if all the other factors in the account were favorable, you know, that was a good spread of risk.

00;21;44;16 - 00;22;07;07
Andrea Pelletier
They like they usually I mean, in the insurance market, a lot of the preferred carriers will pick up the wind exposure in Florida if they if they could balance that with that out of state property. So they want a cat to non cat balance. So with all the other factors in the account were favorable and there was just this one thing where, oh, it's only built to a plus one instead of a plus two, a lot of times they would, they would approve those.

00;22;08;05 - 00;22;17;19
Hal Needham
I see. So they're kind of looking at this risk. They're trying to spread out the risk. They're trying to basically look at this in the context of the big picture of what they're writing and what kind of exposure they have.

00;22;18;11 - 00;22;18;25
Andrea Pelletier
Correct?

00;22;19;12 - 00;22;37;05
Hal Needham
Yeah, that's really interesting. Andrew, We had talked before we recorded this podcast about how I thought it was really interesting how carriers may only want to cover houses with, say, newer roofs, but there may be regulation requiring them to take a roof that's slightly older. Could you share a little bit about that perspective?

00;22;37;10 - 00;23;08;08
Andrea Pelletier
Yes. And this is pre Hurricane Ian. There is definitely a trend in the market place for carriers not to want to write older properties or homes with older roofs. And and I think a lot of that goes back to the fact that, you know, we had Irma and Irma went over top of a lot of these houses that even if they didn't have a roof claim, there was still that intense wind event, that kind of that that passed over this particular house.

00;23;08;08 - 00;23;27;13
Andrea Pelletier
So and I and I think, you know, my personal opinion is that the roof can only sustain so many of those events. So, you know, you know, you've got these carriers that are still trying to be profitable to some extent, have, you know, need to be able to buy affordable reinsurance. And I think that I think the push on that was really coming from the reinsurance market.

00;23;27;13 - 00;23;52;14
Andrea Pelletier
So reinsurance carriers only really wanting to allocate capacity to carriers that are more selective, that have a more I have a a better selection process as far as the new the new business that they're taking on, ones that are going to sustain a storm more effectively where they're not, you know, the roof isn't going to come off after, you know, as a result of the wind.

00;23;53;00 - 00;23;54;05
Andrea Pelletier
So that was pre and.

00;23;55;00 - 00;24;09;10
Hal Needham
That's really interesting. So it sounds like you're saying reinsurance was more favorable than want to partner with insurance companies that are being more selective, that are are not just insuring any old house, but saying, oh, we're pretty selective in maybe the age of the roof or different structural elements.

00;24;09;10 - 00;24;34;04
Andrea Pelletier
Right. Right. The carriers were trying to manage their exposure so that they could sustain their financial stability rating and, you know, have long term financial strength. But it was really causing a big hardship for homeowners because, you know, a roof, a home could still have a good amount of roof life left. So the state stepped in earlier this year and created some reform around that.

00;24;34;04 - 00;25;02;06
Andrea Pelletier
So now and I'm seeing I'm seeing some of that become activated where the state is saying that an insurer cannot refuse to renew or or write or refuse to renew a home with a roof that is 15 years or newer. So the carriers are not allowed to restrict writing through a new accounts or limit their renewals to homes that are where the roof is only ten years old.

00;25;02;06 - 00;25;03;17
Andrea Pelletier
They have to go up to 15.

00;25;03;29 - 00;25;10;17
Hal Needham
So if my roof is 12 years old, they can't say we're going to deny your insurance because of that factor. You're saying with that.

00;25;11;03 - 00;25;12;15
Andrea Pelletier
They would have to have another reason.

00;25;13;10 - 00;25;24;04
Hal Needham
Yeah, that's really interesting. So that that's in a way helping some homeowners get more affordable insurance, whereas maybe the insurance carriers themselves may prefer to almost drop those off if they could.

00;25;24;19 - 00;25;50;26
Andrea Pelletier
Right. Because, you know, ideally, you know, I think part of being able to move forward successfully after this latest, you know, devastating hurricane is that Floridians can maintain their insurance with the carriers that they're with. I mean, hopefully these carriers are going to exhibit, you know, financial financial stability, because that's where that's where the most competitive insurance pricing is going to be.

00;25;51;20 - 00;26;24;23
Andrea Pelletier
Anybody new into the market, I'm sure the rates are going to be higher. I mean, there could be an exception to that rule. But for the most part, you know, the best thing to do is to try to stay with your current insurer. And that and the conversation has really been around risk management, making sure that the roof is properly maintained, making sure that if it is showing signs of age, that it is, that the homeowner is replacing it in a timely manner so that it can properly sustain, you know, hurricane force winds that, you know, could very well be right around the corner.

00;26;24;23 - 00;26;43;23
Hal Needham
Andrew, I'm really glad that you mentioned some things that homeowners can do to get out ahead of this, prepare themselves. It sounds like maintaining that roof is a big thing that they can do. Are there other factors that they can do with their home, their business, their condo, whatever it is, to kind of help them be, you know, hopefully get more favorable insurance opportunities there?

00;26;43;23 - 00;27;06;08
Andrea Pelletier
Are there definitely are. And I think the conversation around this has been to prevent claims. So to address situations that could prevent a claim before it occurs, because having claims activity, unfortunately, you know, is is a criteria and carriers may not be as willing to insure somebody who has had, you know, a robust claims history. But things around I mean when it when we're talking about hurricanes.

00;27;06;08 - 00;27;26;24
Andrea Pelletier
So in addition to maintaining the roof, hardening the home with high impact windows and doors, I mean, that was part of the building code reform a couple of decades ago that has really helped help Floridians and the marketplace. So hurricane impact windows and doors, but then also to one of the other big causes of loss that a lot of people don't talk about.

00;27;26;29 - 00;27;53;16
Andrea Pelletier
It's not as glamorous are water losses. So inside water where, you know, all these homes and all these pipes are getting older, so homes are getting older, pipes are leaking, electrical systems systems malfunction, and a lot of interior water, water loss. So installing a water leak detection system, replacing things like your water supply line and then having, you know, you know, making sure your plumbing systems are all up to date.

00;27;53;16 - 00;27;55;07
Andrea Pelletier
Those are some really key factors.

00;27;55;08 - 00;28;00;13
Hal Needham
Well, in Andrea, those things don't really necessarily need a storm for there to be a crisis in your home. Right.

00;28;00;29 - 00;28;23;21
Andrea Pelletier
Exactly. But you're still displaced. And, you know, it's claims activity and it's you know, it weighs on the carrier's financial stability. And, you know, and also, too, from a consumer standpoint, your ability to get insurance or that houses ability to be insured moving forward, because the claim not only follows the homeowner, it also follows the home. So.

00;28;24;11 - 00;28;47;04
Hal Needham
Yeah, that's very interesting. Andrea. So do carriers have the autonomy to, you know, select someone that they want to cover or not? Like are they regulated that they have to cover certain kinds of people? Like in other words, if I came in, my roof is so many years old and and there are certain criteria, but maybe there have been multiple claims on that house, can they arbitrarily just say, no, we're going to choose not to insure you?

00;28;47;04 - 00;28;48;24
Hal Needham
Do they have that autonomy?

00;28;49;08 - 00;29;11;15
Andrea Pelletier
They have guidelines in place and it could be based on number of losses. It could be based on I mean, there's so many so many differentiating factors of prior claims are a big one age of the home and distance to the water. I mean, there are there's you know, there are just so many factors that determine the eligibility.

00;29;11;15 - 00;29;34;07
Andrea Pelletier
So so if if the risk meets all the eligibility guidelines, then I you know, usually we can get an account written. So there is there's not there's not a you know, I don't usually see underwriters decline to write this this when it meets all the underwriting guidelines that everything is is in place as per their standards.

00;29;34;14 - 00;29;49;17
Hal Needham
I see what you're saying they know they kind of have a system of to evaluate what's going to be profitable, what they want to do business with or not. And so if you fall in in those categories that they want to do business and they're pretty much going to going to write business with you.

00;29;49;27 - 00;30;11;17
Andrea Pelletier
Right? And then there are always going to be some gray areas. Like, for example, I'm I'm working on an account where there's a Tesla shingle roof that sort that solar and not everyone is familiar with the Tesla shingle roof and or or are they comfortable. So I mean, they're always going to be some things that are outside the guidelines and that's left up to underwriting discretion.

00;30;12;03 - 00;30;28;20
Hal Needham
Yeah, that makes a lot of sense. It's very interesting, these details of the market. I think a lot of our listeners are going to be excited to learn about this. And another question, we talked about the litigation. You said 8% of the national claims, 80% of the national litigation coming with with, you know, in the state of Florida.

00;30;28;28 - 00;30;36;11
Hal Needham
Does that usually is that litigation usually tied to a catastrophe or is it just kind of nonstop around the year?

00;30;36;27 - 00;31;05;14
Andrea Pelletier
I you know, I think that it it is. It is well, I saw it very much tied to the catastrophe because of the, you know, the whole roof conversation. You know, it was interesting because after Hurricane Irma, you know, when you look with, you know, looked at looking at neighborhoods, are looking at houses and just, you know, peering up at the roof, a lot of these roof roofs appear to be fine.

00;31;05;14 - 00;31;28;02
Andrea Pelletier
But once you got up there, you could see that there was some structural damage. There was just a lot of conversation. Whether is it a repair or is it a replacement, the late claim filings. I mean, there were a lot of things that were catastrophe driven that encouraged the litigation problems that we experienced. But are there are there I think there are litigation concerns even outside of account loss.

00;31;29;14 - 00;31;58;06
Andrea Pelletier
You know, I think that I think that it's sort of it's been a trend. So I think that because it's been a trend, it's you know, I think there's a you know, consumers might much more quickly want to want to combat a declination, a claim declination versus accept the fact that some things aren't covered. And actually that is what we're seeing.

00;31;58;26 - 00;32;22;27
Andrea Pelletier
I'm not take the litigation part of it, but but I am, you know, definitely seeing a good portion of the claims that are filed recently from Hurricane Ian, things that aren't covered. I mean, I think, you know, and maybe it's just in a way, you know, it's more of an awareness piece that consumers become aware of things that they cannot insure for because you cannot insure for everything, things like additional living expenses if your home is flooded.

00;32;23;21 - 00;32;45;25
Andrea Pelletier
You know, there are a lot of exclusions in the policy that relate to flood. And so I don't you know, you know, I think it's much, you know, from an agent point of view, as much as you try to educate your clients on that, there's you know, there is only a certain amount that they're going to retain. And and frankly, had they known that, you know, these are the limitations, limitations on the insurance side, would they still have purchased a property?

00;32;45;25 - 00;32;50;16
Andrea Pelletier
I think they would. So I do think that there's an education. There's an education element there.

00;32;51;04 - 00;33;10;10
Hal Needham
Sure. And, Andrea, let's talk about that. You work at a really interesting interface. You're so knowledgeable with insurance, but then you're working a lot with the real estate market, educating and training realtors. I mean, so what does that look like? What are the kinds of questions you get from realtors as far as, you know, just training them, educate them in this whole field.

00;33;10;29 - 00;33;39;24
Andrea Pelletier
Right. So, yeah, I've I've always sort of positioned myself with the realtors from a place of support, you know, providing support to help field those questions. On the insurance side, there's always a lot of questions about flood. Is this in a flood zone? What is the insurance look like? So on and so forth. And, you know, and now but now more than ever, a lot of questions on the realtor side as far as you know, is my client going to have a going to be able to buy affordable insurance?

00;33;39;24 - 00;34;12;20
Andrea Pelletier
So on the education side right now, I would say right now post and it is I think it is around for me it has been around, you know, providing a realistic expectation of what the market is looking like right now when it is expected to change and why it's not changing faster. So I think that, you know, as a as a professional, I like to be completely transparent and and I and and I think that it's really important to have a healthy, sustainable market moving forward.

00;34;12;20 - 00;34;35;10
Andrea Pelletier
I mean, insurance is the underpinning of the real estate market. And real estate is, you a gigantic element in our economy here in Florida. So it's essential that the real estate market, you know, has it has the support that it needs to be able to, you know, to attract folks to Florida. And I think I think folks still want to come to Florida, but they do want to transfer.

00;34;35;10 - 00;34;56;04
Andrea Pelletier
I think for the most part, homeowners want to want a risk transfer. They don't want to absorb the loss entirely. If they're if they're devastated by a hurricane, they want to be able to buy proper coverage. So are the products there for them? You know, it's I don't know. I don't know what the answer to that is, because we're still waiting to see what the reinsurance markets are going to do.

00;34;56;21 - 00;35;13;22
Hal Needham
So in some of this is getting into market volatility after a year and right now. So like what kind of questions are you getting from realtors right now? Are they wanting to know, like getting into next calendar year, what kind of products will be available? Will they will their clients be able to get insurance, those types of things.

00;35;14;24 - 00;35;36;26
Andrea Pelletier
More, more. So I would say a good number of realtors have reached out to me in the last couple of weeks saying, I have a listing, I have a buyer, we're under contract. Is it is it true that there's a moratorium? Yes, there are a few carriers that are writing and, you know, do you have something for this particular client?

00;35;36;26 - 00;35;54;28
Andrea Pelletier
I've been shopping the market for a couple on a couple of different ones. I've had two in the last couple of weeks, you know, delivered the news that I had no market or or if I have no market, this is why there's existing damage. It has to be remediated. The repairs have to be made. There's an open claim.

00;35;54;28 - 00;36;11;06
Andrea Pelletier
No. What's you know, for the most part, no one's going to want to write a piece of property with an open loss. So it's been more like deals in the immediate future that realtors have been mostly concerned about. I don't I don't know how far ahead they're thinking as far as what the market is going to look like later.

00;36;11;06 - 00;36;34;11
Andrea Pelletier
I think that there seems to be a bit of a pause that folks are taking to, you know, do the the water remediation that needs to happen and do the rebuild that needs to happen. But still, at the same time, and I think it's coming from, you know, homeowners and condo unit owners who had made a decision that this is their you know, they're going to be moving to Florida.

00;36;34;11 - 00;36;52;03
Andrea Pelletier
They sold their house up north. They already have, you know, a plan in mind as far as how they want it. You know, they're moving to Florida and this is the house. They're under contract with. And so where do we move forward from here? I did have one deal that I was getting ready to buy and that where the homeowner ended up not doing it.

00;36;52;11 - 00;37;19;00
Andrea Pelletier
But, you know, and I think that there are there are delays on the real estate side where, you know, we're threatening to the contract. They can they have they have more time for for buyers and sellers to decide what they're going to do. So they're not under tremendous pressure to make a decision immediately. But, you know, I think that realtors are are, for the most part, concerned about long term, you know, long term insurability.

00;37;19;00 - 00;37;24;00
Andrea Pelletier
I think we all are. So realtors, service professionals like myself and just homeowners in general.

00;37;24;26 - 00;37;43;00
Hal Needham
Yeah, that's really interesting. And it's interesting to to talk to you because you're you work a lot in the Naples area, so I know I wrote it out. Ian in the Punta Gorda to Fort Myers area. There was a lot of water and wind damage. From my understanding, Naples tended to be more on the flood side, more on the water side.

00;37;43;00 - 00;37;50;17
Hal Needham
Did that change how all this plays out in a place like Naples where maybe you did not get as much wind impacts, but you got a lot of flooding?

00;37;50;29 - 00;38;12;23
Andrea Pelletier
We did, yes. So I think it will. I mean, in our area, when you look at the magnitude of the claims that we're handling, they're all water quarter events with the exception of automobiles that were flooded. So that's all property that's that's covered under the auto policy, but majority are flood related. I've had a few wind claims. Mostly the wind claims that I've been working on have been further north.

00;38;12;23 - 00;38;30;29
Andrea Pelletier
As you said, it's more of a wind event there. However, any time there's a catastrophe in the state of Florida that is a wind event, it affects all Floridians. So even though, you know, I could sit here and say, well, I didn't have I didn't have a wind claim on my house, and it's true, but other people did.

00;38;30;29 - 00;38;35;17
Andrea Pelletier
And so it's going to affect the market and it's going to affect every one of us and our on our policies.

00;38;35;28 - 00;38;49;09
Hal Needham
Oh, so you could be maybe up in Tampa and all of a sudden your premium on wind insurance may go up and you may say, I didn't have a wind claim. No one in my zip code out a wind claim, but because it was absorbed somewhere in the state, that's going to affect everyone's premium, right?

00;38;49;14 - 00;39;12;28
Andrea Pelletier
Because, you know, they they use different demographics and it'll be, you know, closer to the water rates are higher. Further away from the water rates are lower. But say the same criteria age of the home, whether it's masonry or concrete block, you know, does that house have hurricane impact shutters? So they'll be all the same underwriting factors that it would apply to any county.

00;39;12;28 - 00;39;33;16
Hal Needham
Andrea, here's a question. I hope I can express this clearly. Let's say I live in Fort Myers and I had a fortified house built really well. I actually did not have any wind damage sustained. Right. And also I'm elevated above the flood waters of Ian. So I also did not flood. So I didn't flood. I had no wind damage.

00;39;33;24 - 00;39;49;11
Hal Needham
Am I going to absorb an increased premium because other people, you know, took a hit and we need to spread out that loss or on the flip side, could I say, hey, look, I just took a hit from a cat for a hurricane and have no damage to my property because it's built so well, I deserve a discount.

00;39;49;28 - 00;40;19;18
Andrea Pelletier
Okay. So standard markets like, you know, all the standard markets, these double check rated carriers that we're talking about up the preferred package markets are you know, I'm talking about carriers like Chubb Pure, AIG, Cincinnati, Berkeley, one vault insurance. They are all their rates are filed through the Florida Department of Insurance. So for there to be a rate increase, they have to produce actuarial, which means that they have to demonstrate.

00;40;20;00 - 00;40;36;18
Andrea Pelletier
You know, there were this number wind claims that resulted in loss and I need to take rate in this area. So all of that doesn't happen overnight. So they would have to file with the Florida Department of Veterans to get a rate increase. And in the. Yes, if that is all true, then we should expect rates to go up.

00;40;36;25 - 00;41;00;06
Andrea Pelletier
But when you get into the excess surplus lines like Lloyd's of London type markets, they react much more quickly. So right after a storm, a Lloyd's hour, I'll just say QBE Insurance, that just I can't think of all the different. There are many, many Lloyd's of London syndicates there. They're going to raise their rates a lot more quickly based on the probability that there there was going to be another storm.

00;41;00;26 - 00;41;28;15
Andrea Pelletier
I mean, the fact that that home is built exceptionally well and it's it's properly elevated, I hope to I hope that there'll be a number of carriers who would be interested in writing that home. I mean, that's sort of the insurance landscape that we've experienced in the past where a homeowner that built their home exceptionally well would have a choice in the marketplace as to which carrier would would they want they wanted to go with I don't know if we're going to have that luxury in the future.

00;41;29;05 - 00;42;00;05
Andrea Pelletier
And so because we may not have the choices we've had in the past, that homeowner may pay more as well. So it could be it's it's you know, rates have to be filed through the Florida Department of Insurance and standard markets have to comply with that. But then there's also the capacity issue that fewer options usually drives the rate up when a healthy market is where carriers, you know, there say more carriers that want to come into the Florida marketplace and that selection process drives rates down.

00;42;00;05 - 00;42;02;28
Andrea Pelletier
So we probably won't be in that type of a market for a while.

00;42;03;12 - 00;42;28;07
Hal Needham
That's really interesting. Andrew I love I love just soaking in your knowledge with all this stuff. These are questions I'm getting. A lot of times my background's more in meteorology and climatology, so this is great to learn from you about how these markets work, how they carriers think, how insurance and reinsurance plays out. Before we close out on this podcast, I wanted to the focus a little bit away from Florida to other states how Florida might be different than other areas and actually how I found you.

00;42;28;07 - 00;42;52;13
Hal Needham
We just passed the ten year anniversary for Superstorm Sandy. And the reason I say Superstorm Sandy instead of Hurricane Sandy, it was a very complex storm. It was a hurricane really passing by the east coast of Florida. It was hurricane when it passed by North Carolina. So there were a lot of hurricane claims in the southeastern U.S. But right before Sandy made landfall in New Jersey, it was officially classified, not a hurricane anymore.

00;42;52;21 - 00;43;11;21
Hal Needham
And sometimes people say, I was just reading the National Hurricane Center report. They think that it actually did produce hurricane force winds, but it was no longer a tropical cyclone. It became what we call extra tropical. It lost some of its tropical characteristics. And a lot of people say, well, who cares? My house took on Wynn and flood damage.

00;43;11;29 - 00;43;25;08
Hal Needham
Who cares what you call it? But I found this this article that you had written, where it actually does make a difference for homeowners and their insurance policies depending on the classification of how the storm is classified. Could you share a little bit about that?

00;43;25;19 - 00;43;51;02
Andrea Pelletier
Absolutely. I found that that event very interesting because, you know, ten years ago, we were still, you know, educating homeowners about how a hurricane deductible works. That is something that was rolled, rolled on to homeowner policies. It was posed to Andrew. And yes, when it's a hurricane, at least a trigger in Florida, every state has a different trigger.

00;43;51;12 - 00;44;20;06
Andrea Pelletier
So the trigger in Florida is when there's a hurricane watch or warning that's issued by the National Hurricane Center anywhere in the state, then the hurricane deductible is activated. So it's a percentage of your dwelling coverage limit versus your your all other perils deductible. So that story I thought, was very interesting because, you know, folks in North Carolina were faced with the hurricane deductible losses versus folks in New Jersey had their all perils deductible.

00;44;20;06 - 00;44;33;14
Andrea Pelletier
So they had a much smaller out of pocket expense, which was, you know, very good for homeowners in that area who probably were completely not prepared for that storm. So but it was it was a really good way of illustrating how the hurricane deductible works.

00;44;34;04 - 00;44;53;14
Hal Needham
Yeah, that's really interesting. So it sounds like you're saying for especially hurricane prone states, catastrophe states are hurricane deductible means if it was classified as a hurricane, really, whether or not your home faced hurricane force winds, just if it was classified by the hurricane Center as a hurricane, then you have to pay that hurricane deductible. That's correct. Yeah.

00;44;53;22 - 00;45;18;23
Hal Needham
Yeah. Very interesting. And I thought it was fascinating that Sandy actually was producing Hurricane force winds. But just before landfall in New Jersey, it was no longer officially a hurricane that that reduced that deductible for a lot of homeowners. Andrew, I really appreciate your insights. Do you have any last any last insights, any last perspectives to share with our listeners just on on this whole topic, I know you cover a wide range of of expertise professionally.

00;45;18;23 - 00;45;20;11
Hal Needham
Any any last thoughts or insights?

00;45;20;29 - 00;45;55;17
Andrea Pelletier
You know, I have you know, as I said when we first started talking, the insurance marketplace has been, you know, changed dramatically. It has over the course of my, say, 30 year tenure. And, you know, we are definitely getting into the space where the conversation is more around risk management. And I just invite homeowners to consider that in terms of making sure that their homes are maintained exceptionally well and doing everything that they can on the consumer side to prevent a claim to confirm that all of their systems are up to date.

00;45;55;22 - 00;46;15;19
Andrea Pelletier
Because I think that that affects all Floridians. And I you know, I'm a I'm a I'm a citizens here as well and a policyholder and I plan on spending my retirement in Florida. So I want to be able to you know, I just think, you know, it's very important to me to help a healthy economy, to have a healthy insurance environment.

00;46;15;19 - 00;46;23;09
Andrea Pelletier
And I do think it it's going to take all of us as responsible homeowners to to get to where we need to be.

00;46;24;10 - 00;46;42;05
Hal Needham
Andrea, for your homeowners that heard you say that and say, okay, what can I do to take actions to better prepare my property, to better maintain my space, my belongings, my my home? Are there workshops they can go to? Are there things they can find online? Like how can people find you online or are there seminars? Are there webinars?

00;46;42;11 - 00;46;46;09
Hal Needham
What are what resources out there could help guide people to make these better decisions?

00;46;46;09 - 00;47;12;22
Andrea Pelletier
Yeah, and I think that that one of the things that we could do better, you know, especially with the flooding, the flooding event that we know that occurred, you know, we there's been a lot of conversation around having hurricane evacuation plans for their cars. And I mean, that is actually been a conversation for a few years. But the problem had been that the carry that there really wasn't it wasn't a solid solution.

00;47;12;28 - 00;47;34;20
Andrea Pelletier
I mean, where could homeowners relocate their cars? How can we make sure that all these cars are not going to be flooded? So there will definitely be more conversation around that. I know that as an agency, we're going to be putting together some directive material for our clients to help them protect their vehicles. But, you know, on the property side, also, you know, you can always move your personal property upstairs.

00;47;34;20 - 00;47;49;15
Andrea Pelletier
So I mean, that's just something that probably didn't occur as many times this time as it could have from the storm, as that could have led to workshops and events of where folks can learn. I mean, I don't I'll have to research that. I Yeah, you'll have to research that.

00;47;49;18 - 00;48;17;05
Hal Needham
Yeah. It seems from the time I spent on the ground before, during and after. And I got the sense people thought, wow, this is real stuff. Like people that actually went through a catastrophe like that, that got flooded, that had wind damage. I sense that people want to better prepare, that they want to learn better about risk. I think a lot of people felt a little bit maybe flat footed or, you know, like they were they weren't really thinking this was going to happen because maybe previous storms had missed them and maybe a little bit complacent.

00;48;17;05 - 00;48;23;17
Hal Needham
And now I think is a good time where people are going to be hungry for education and do do some things to better prepare themselves in their property.

00;48;23;25 - 00;48;25;06
Andrea Pelletier
Absolutely.

00;48;25;06 - 00;48;48;19
Hal Needham
Andrea, we were talking a little bit about this deep hyperactive hurricane history in Florida, like the twenties, the forties, the fifties up through the mid sixties, very hyperactive. In fact, I just got into the climatology, the hurricane climatology of South Florida. In the past 50 years, there have been six major hurricanes in South Florida. That's 1973 to 2022, six major hurricanes.

00;48;48;26 - 00;49;08;15
Hal Needham
The 50 years before that, there were 12. There were twice as many. So in fact, even from 1945 to 1950, there was a six year period with five major hurricanes. If you repeated it today, I mean, it would just be devastating to South Florida. Do you think people are aware of this deeper history in the region, or do you think they're not as aware of that?

00;49;09;02 - 00;49;27;20
Andrea Pelletier
I think they are not aware of that at all. In fact, I was not aware of it until you shared that data with me when we first started talking, because I always look at her, you know, I always look at weather patterns in cycles, but smaller cycles. And so you're looking at the bigger cycles and I'm looking at the smaller cycles.

00;49;27;20 - 00;49;56;25
Andrea Pelletier
Within the bigger cycles. I think that one of the reasons that that, you know, we I'll say just Neapolitans Floridians, having gone back to look at that that that longstanding history is because it's say you know it's not it was it was pre modern Naples or pre modern Florida. So but I think that's really important information because we know that history always repeats itself and that, you know, it is you know, it does help us prepare for what's to come.

00;49;57;09 - 00;50;16;25
Hal Needham
When I've looked at the demographics in the region, the seventies and eighties have this explosive growth. So I think a lot of people have lived there for 50 years. And if their baseline was the seventies and eighties, if they think that was normal, two decades when there were no major hurricanes, all of sudden we have had some powerful storms in recent decades, Andrew and Irma and others.

00;50;17;02 - 00;50;32;22
Hal Needham
But they've been, you know, pretty infrequent compared to, say, the forties and fifties. So if your baseline is a time of tranquility, all of a sudden this storm, like in people are shocked or they're thinking it must be climate change, the deeper history kind of tells a bit of a different story. If that makes sense.

00;50;33;02 - 00;50;56;16
Andrea Pelletier
Yeah, abso absolutely. And you know, a lot of these flood zones are flood zones and we had not experienced a devastating flood event like we did for hurricane in Hurricane Ian since Hurricane Donna, which was in the fifties. So these 80 flood zones, the prediction is that every hundred years they're going to flood and that and Hurricane Ian hit, say, at the 70 year mark.

00;50;56;22 - 00;51;18;11
Andrea Pelletier
So we were really due for a flood in this area. So it does make me wonder if the insurance carriers were aware of that. Our were you know, were carriers predicting that there was going to be a flood coming, which would have been which would have sort of supported the apprehension that that we had been seeing in the market last few years on wanting to write properties in coastal areas.

00;51;18;11 - 00;51;25;28
Andrea Pelletier
So I think it all does go back to the history and it it's a science which and I'm so glad someone is researching that.

00;51;26;15 - 00;51;44;26
Hal Needham
Andrea, thanks a lot. You know, I always hope I hope you get a period of tranquility and recovery down there. But it is it's good to be aware of our history, especially when there have been a lot of catastrophic hurricanes. Andrea, I really appreciate you taking the time to come on the podcast. We're looking forward to following you and your career and thank you so much for taking time to share your insights today.

00;51;45;09 - 00;51;47;15
Andrea Pelletier
I pleasure. I had a good time. Thank you for having me.

00;51;47;17 - 00;52;07;05
Hal Needham
Thank you, Andrea. Thank you so much for sharing these insights with us. We covered so much relevant information in this podcast that's applicable to people interested in insurance risk assessment and even real estate and the housing market in places like Florida. For topics really stood out to me that I thought were relevant and I wanted to reflect on those.

00;52;07;17 - 00;52;29;22
Hal Needham
Number one, Andrea mentioned that people are concerned about continued availability of insurance in places like coastal Florida, where the business of providing catastrophe insurance used to be profitable. But over the years many carriers have pulled out of this space as they perceive it as being too risky. Within this context, Andrea shared that the conversation has been directed toward the topic of risk management.

00;52;30;00 - 00;52;54;21
Hal Needham
Within this dialog is the concept that risk management involves the collective actions of all of us to build and maintain our homes better. This makes it more likely that we will all have better options for insurance coverage, which is key for transferring the risk of investing in real estate in places like Naples or Miami, Florida. A second topic I found interesting was this dance that exists between private sector insurance carriers and government regulation of the industry.

00;52;55;07 - 00;53;16;16
Hal Needham
Andrea shared how carrier carriers may want to be more selective in only taking on the risk for newer construction, for example. She shared the example of a company saying, Hey, we just want to insure homes that have rooms less than ten years old. But regulations may require them to go back farther than that and cover homes with rooms up to 15 years old, for example.

00;53;17;05 - 00;53;45;26
Hal Needham
I did not realize there was so much interaction between the private sector and government regulation on topics like this. I think our listeners will really find that interesting. Number three, I thought Andrea's reaction that people in South Florida may just consider more recent decades of hurricane climatology when assessing assessing risk was really insightful. This pattern fits with perspectives I've seen in other regions that have a catastrophic weather history a long time ago, but much more tranquil weather on average in recent decades.

00;53;46;10 - 00;54;09;09
Hal Needham
Other places that concern me include coastal Georgia and this also northeastern Florida and the Jacksonville area up through coastal Georgia and even southern South Carolina. This concave shaped coastline is an area where locals will say we do not get hurricane strikes. Hurricanes either hit north of us in eastern South Carolina or North Carolina or they hit south of us further south on the Florida peninsula.

00;54;09;17 - 00;54;34;10
Hal Needham
But if you look back in history, the late 1800s in this region was very hyperactive. In fact, in the late 1800s, they had eight hurricanes passing within 75 nautical miles of Hilton Head, South Carolina, in an 11 year period. Hilton heads right on the border there between South Carolina and Georgia. Eight hurricanes in 11 years. But today, you'll talk to people and they'll be like, I've lived here my whole life.

00;54;34;11 - 00;54;55;20
Hal Needham
We don't get a lot of hurricane hits at all. Another area concerns me, South Texas. South Texas has this really hyperactive hurricane history in the thirties. Also the sixties through 1980, the seventies were really active down there. 1967, there was Hurricane Beulah in 1980, Hurricane Alan. But if you get south of Corpus Christi, nothing really big over the past 40 years.

00;54;55;20 - 00;55;15;18
Hal Needham
So some of these areas concern me that we see hyperactive hurricane histories. But nothing really in the past, you know, three or four decades. And when I say nothing, I should say just on average, a more more tranquil in recent decades compared to the deeper history. Finally, I thought this dialog about hurricane deductibles was interesting for our listeners.

00;55;15;24 - 00;55;35;09
Hal Needham
The concept there is that you have a hurricane, that if you have a hurricane deductible in your insurance policy, you have to pay a higher deductible on an insurance claim. If the hurricane clause is triggered. Andrea said this happens in Florida. If a hurricane watch or warning is declared by the National Hurricane Center. Other states may have different triggers.

00;55;35;16 - 00;55;54;20
Hal Needham
The point here, though, is that if the deductible is triggered, this impacts all policyholders in that area, regardless of if your home actually experienced hurricane force winds. So you may say, hey, there were no hurricane force winds in my zip code. And the policy is it doesn't matter if a hurricane watch or warning was issued by the National Hurricane Center in Florida.

00;55;55;00 - 00;56;24;23
Hal Needham
That clause is. So Superstorm Sandy was an unusual storm. And we talked about that because it was classified as a tropical cyclone, which is either a tropical storm or a hurricane. That's impacted Florida up through North Carolina. So in those states, in the southeastern U.S., the hurricane cause was triggered. But getting into the mid-Atlantic states where huge impacts impact affected people in New Jersey, New York, the hurricane clause was not triggered because the National Hurricane Center officially said that it was no longer tropical.

00;56;24;23 - 00;56;46;08
Hal Needham
It became an extra tropical system before it made landfall in New Jersey. So even though some locations in New Jersey observed hurricane force winds from Sandy, it actually was not coming from a hurricane anymore. It was coming from something called Extratropical and that we could do a whole nother podcast about that, what that means meteorologically. But typically extratropical.

00;56;46;11 - 00;57;09;11
Hal Needham
You have a mix of air masses with a hurricane. You never have a mix of air masses. It has a warm core. It's feeding off warm ocean water. And so structurally it's different. And this actually plays into some of the nuances of the insurance policies. And so that's really interesting, even though you may have had hurricane force winds in Sandy, in New Jersey, it was no longer a hurricane at that point.

00;57;09;15 - 00;57;32;08
Hal Needham
And this is why we often refer to Sandy as Superstorm Sandy instead of Hurricane Sandy. Special thanks to Andrea for taking time to educate us on this podcast. We covered a lot of really fascinating topics that are going to be interesting for people that have concerns or financial concerns in these risky coastal areas. We spend a lot of time at the crossroads of meteorology, climatology, insurance and real estate.

00;57;32;08 - 00;57;51;27
Hal Needham
In this episode here on the Geographic podcast, we love to bring you cutting edge insights that apply to your personal or professional life. A few as are thank thank you's out there. I'd definitely like to thank our GIO production and marketing team. They are Kenneth Baker, Ashley Anderson, Jeremiah Long, Christopher Cook and Amy Wilkins. Thanks again to our fifth listener.

00;57;51;28 - 00;58;13;02
Hal Needham
Some of you listen every week and we love that you're tuning in. We'd love to hear from you and love to hear any feedback as well. I'm Dr. Howard. Thanks for tuning in. We really appreciate your support of our work and we'll catch you on the next episode of the Geo Trek podcast.

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