The Very Real Dangers of Coastal Living — And Why Businesses Just Don’t Seem to Care

Property exposures increase along the coast even as insurers become wary of taking on coastal risk.
By: | October 1, 2020

As if a pandemic weren’t enough of a headache for insurers, 2020 has seen an active hurricane season along the Atlantic.

Recently, the one-two punch of Hurricanes Marco and Laura swept the Gulf Coast near Louisiana, leaving destruction in their wake. Laura, which made landfall as a category 4 hurricane, left 26 people dead and many more injured. Then, Hurricane Sally struck Florida as a category 2 storm, causing property damage, runaway barges and numerous injuries.


There have been so many hurricanes, tropical storms and tropical depressions this year that the National Hurricane Center exhausted its list of storm names for the year.

“There are more category five, more category four then there have been before,” said Sean Harper, CEO of Kin, an Insurtech company that offers home insurance in areas prone to natural catastrophes. “They intensify more quickly … They can take you by surprise.”

Such an active natural catastrophe season makes it clear that living and owning a business on the coast is more dangerous than ever, but many don’t seem to care.

More than 50 million people live on the coast of the Atlantic Ocean or the Gulf of Mexico, according to recent U.S. Census data and the number of people living in coastal cities has risen every year since 2000, with the exception of 2005 — the year Hurricane Katrina struck.

Home buyers continue to purchase sought-after beach front property, despite the risks, and new businesses continue to take root in the sunny states along the Gulf and Atlantic Coasts.

As always, insurers need to determine what, if any, properties are safe to insure and encouraging insureds to take steps to reduce their property risk. When a claim occurs, digital tools can make investigating and resolving a claim safer and more efficient for all parties.

Global Climate Change Increases Hurricane Risk

It’s not a coincidence that storms have increased in intensity and damages from natural catastrophes (Nat CATS) increased over the last few years. Warming weather, researchers have found, brings stronger wind speeds, increased rains and greater storm surges to already dangerous hurricanes.

Sean Harper, CEO, Kin

These stronger storms bring an increase in property damage and uninsured losses. In 2019, natural disasters were responsible for $137 billion in insured losses and in 2018 they caused $176 billion, only $93 million of which were covered by insurance.

With an already disastrous hurricane season, 2020 is shaping up to see similar insured and uninsured loss rates. Hurricane Laura caused an estimated $12 billion in damages, and AIR Worldwide, a Verisk business, estimates that Hurricane Sally will cost insurers between $1 billion and $3 billion in losses to onshore property.

Recent storms inflicted major amounts of damage for a number of reasons. Warmer weather allows storms to intensify more quickly and to hang around for longer, leaving properties exposed to greater amounts of wind and rain.

“When a storm moves through quickly, it’s much less dangerous than when it sits there and you’re exposed to the storm — the rain and the wind — for a much longer time period,” Harper said.

Damage caused directly by hurricanes isn’t the only Nat CAT risk that properties face from these storms, however. The Pacific Coast, which usually doesn’t see hurricanes make landfall, can experience increased winds that contribute to already dangerous wildfires, according to Harper.

“The wind actually contributes a lot to the wildfires that we’re having right now. One of the main reasons why wildfires are burning more than they have before is that wind speeds have increased,” Harper said.

“That, combined with increased drought … has created sort of epic levels of wildfires these last three or four years.”

Hurricane Risk: A Danger Some Won’t Insure

In the face of increased risk, many property insurance carriers are increasing their rates or pulling out of dangerous states like Florida or California entirely.

Three major property insurers have already filed requests to increase their rates by 26% to 30% this year, ABC Action News reports, and many in the Property and Casualty (P&C) industry expect premiums to rise as terms get tighter.

“20 years ago, the big carriers, the name brand carriers, had like 70% market share in Florida; now they have 10% market share,” Harper said.


Added to the already hardening market, is the COVID-19 pandemic, which is still hectoring P&C insurers. When the pandemic first hit, many businesses owners turned to their property policies to provide relief using business interruption coverage. When they found out pandemics were excluded, many sued.

These cases are still being heard. Both insurers and insureds won’t know the outcomes for months, if not years. No one knows which way the courts will go, but property owners — especially ones in areas prone to Nat CATS — should prepare for rate increases, if they can find coverage at all.

To help retain coverage, insureds can take action to reduce the risks their properties face. Retrofitting properties with features like hurricane straps, impact windows and buttressed roofs can help make an individual building more likely to withstand storms, thereby reducing their risk and making them more attractive to insurers.

Insureds and insurers can also encourage policy makers to shift towards natural infrastructure, like wetlands, which can help absorb water and reduce flood risk. Increasing the amount of wetlands in cities that are highly built up can greatly reduce the risks of damages from storms, according to Harper.

“The way that we’ve built our cities, there’s just a lot more asphalt and a lot less wetlands,” he said. “You see this in particular in places like Houston. There’s just nowhere for the water to go because everywhere’s been built up.”

Reducing Claims Costs Through Digitization

Property owners may be able to retrofit their buildings and try to reduce risk by encouraging shifts in infrastructure policy, but some claims inevitably will still occur.

“We see this as a trend that will continue, if not accelerate, unfortunately,” Harper said, “until we collectively can get our act together and start emitting less carbon.”

To adapt to a world with increased Nat CAT risk from hurricanes and tropical storms, insurers will need to digitize their claims processes.

Severe weather events create all kinds of obstacles to traditional claims investigations and processing. Drones, satellites, photos and videos can replace in-person damage assessments, which can often be challenging or even dangerous after severe weather.

Road closures can make it difficult for adjusters to reach their destinations and in cases where a home was destroyed, claimants may not have a physical address for mailing forms.

Claims can also be affected by manpower issues when numerous properties have damages. Hurricanes Harvey and Irma caused so much damage that there was a shortage of adjusters, Harper noted.

Digital claims platforms are more convenient for users as well, allowing them to check the status of their claims quickly so that they know when their repairs will be completed or when they will be receiving insurance money.

“You can’t change how long things might take to be repaired, but you can help move the processes and help people understand where they stand,” said Jamie Yoder, president of Snapsheet, a digital claims platform that helps automate some aspects of the claims process.


Switching over to digital systems can also be cheaper for insurance. Using photos, videos and images captured by drones to assess damage means insurers don’t have to pay an adjuster to go to the site. Digital platforms can also make processing claims more efficient which saves time and money.

“Oftentimes we’re not deploying individuals where you can do things via satellite,” Yoder said.

“It starts with the ability to investigate, in an expedited fashion, but also importantly, at the right cost.”

It may be some time, however, before carriers are prepared for both digital claims platforms and the severity of current weather events given the industry’s reputation as a technology laggard.

“The average insurance company in the United States is 100 years old. And they just have a really hard time responding when things change,” Harper said.

“They have a hard time responding when consumer behavior changes, they have a hard time responding when technology changes, they have a hard time responding when the weather changes.” &

Courtney DuChene is a staff writer at Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

The Betrayal of Elizabeth

In this Risk Scenario, Risk & Insurance explores what might happen in the event a telemedicine or similar home health visit violates a patient's privacy. What consequences await when a young girl's tele visit goes viral?
By: | October 12, 2020
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Elizabeth Cunningham seemingly had it all. The daughter of two well-established professionals — her father was a personal injury attorney, her mother, also an attorney, had her own estate planning practice — she grew up in a house in Maryland horse country with lots of love and the financial security that can iron out at least some of life’s problems.

Tall, good-looking and talented, Elizabeth was moving through her junior year at the University of Pennsylvania in seemingly good order; check that, very good order, by all appearances.

Her pre-med grades were outstanding. Despite the heavy load of her course work, she’d even managed to place in the Penn Relays in the mile, in the spring of her sophomore season, in May of 2019.

But the winter of 2019/2020 brought challenges, challenges that festered below the surface, known only to her and a couple of close friends.

First came betrayal at the hands of her boyfriend, Tom, right around Thanksgiving. She saw a message pop up on his phone from Rebecca, a young woman she thought was their friend. As it turned out, Rebecca and Tom had been intimate together, and both seemed game to do it again.

Reeling, her holiday mood shattered and her relationship with Tom fractured, Elizabeth was beset by deep feelings of anxiety. As the winter gray became more dense and forbidding, the anxiety grew.

Fed up, she broke up with Tom just after Christmas. What looked like a promising start to 2020 now didn’t feel as joyous.

Right around the end of the year, she plucked a copy of her father’s New York Times from the table in his study. A budding physician, her eyes were drawn to a piece about an outbreak of a highly contagious virus in Wuhan, China.

“Sounds dreadful,” she said to herself.

Within three months, anxiety gnawed at Elizabeth daily as she sat cloistered in her family’s house in Bel Air, Maryland.

It didn’t help matters that her brother, Billy, a high school senior and a constant thorn in her side, was cloistered with her.

She felt like she was suffocating.

One night in early May, feeling shutdown and unable to bring herself to tell her parents about her true condition, Elizabeth reached out to her family physician for help.

Dr. Johnson had been Elizabeth’s doctor for a number of years and, being from a small town, Elizabeth had grown up and gone to school with Dr. Johnson’s son Evan. In fact, back in high school, Evan had asked Elizabeth out once. Not interested, Elizabeth had declined Evan’s advances and did not give this a second thought.

Dr. Johnson’s practice had recently been acquired by a Virginia-based hospital system, Medwell, so when Elizabeth called the office, she was first patched through to Medwell’s receptionist/scheduling service. Within 30 minutes, an online Telehealth consult had been arranged for her to speak directly with Dr. Johnson.

Due to the pandemic, Dr. Johnson called from the office in her home. The doctor was kind. She was practiced.

“So can you tell me what’s going on?” she said.

Elizabeth took a deep breath. She tried to fight what was happening. But she could not. Tears started streaming down her face.

“It’s just… It’s just…” she managed to stammer.

The doctor waited patiently. “It’s okay,” she said. “Just take your time.”

Elizabeth took a deep breath. “It’s like I can’t manage my own mind anymore. It’s nonstop. It won’t turn off…”

More tears streamed down her face.

Patiently, with compassion, the doctor walked Elizabeth through what she might be experiencing. The doctor recommended a follow-up with Medwell’s psychology department.

“Okay,” Elizabeth said, some semblance of relief passing through her.

Unbeknownst to Dr. Johnson, her office door had not been completely closed. During the telehealth call, Evan stopped by his mother’s office to ask her a question. Before knocking he overheard Elizabeth talking and decided to listen in.


As Elizabeth was finding the courage to open up to Dr. Johnson about her psychological condition, Evan was recording her with his smartphone through a crack in the doorway.

Spurred by who knows what — his attraction to her, his irritation at being rejected, the idleness of the COVID quarantine — it really didn’t matter. Evan posted his recording of Elizabeth to his Instagram feed.

#CantManageMyMind, #CrazyGirl, #HelpMeDoctorImBeautiful is just some of what followed.

Elizabeth and Evan were both well-liked and very well connected on social media. The posts, shares and reactions that followed Evan’s digital betrayal numbered in the hundreds. Each one of them a knife into the already troubled soul of Elizabeth Cunningham.

By noon of the following day, her well-connected father unleashed the dogs of war.

Rand Davis, the risk manager for the Medwell Health System, a 15-hospital health care company based in Alexandria, Virginia was just finishing lunch when he got a call from the company’s general counsel, Emily Vittorio.

“Yes?” Rand said. He and Emily were accustomed to being quick and blunt with each other. They didn’t have time for much else.

“I just picked up a notice of intent to sue from a personal injury attorney in Bel Air, Maryland. It seems his daughter was in a teleconference with one of our docs. She was experiencing anxiety, the daughter that is. The doctor’s son recorded the call and posted it to social media.”

“Great. Thanks, kid,” Rand said.

“His attorneys want to initiate a discovery dialogue on Monday,” Emily said.

It was Thursday. Rand’s dreams of slipping onto his fishing boat over the weekend evaporated, just like that. He closed his eyes and tilted his face up to the heavens.

Wasn’t it enough that he and the other members of the C-suite fought tooth and nail to keep thousands of people safe and treat them during the COVID-crisis?

He’d watched the explosion in the use of telemedicine with a mixture of awe and alarm. On the one hand, they were saving lives. On the other hand, they were opening themselves to exposures under the Health Insurance Portability and Accountability Act. He just knew it.

He and his colleagues tried to do the right thing. But what they were doing, overwhelmed as they were, was simply not enough.


Within the space of two weeks, the torture suffered by Elizabeth Cunningham grew into a class action against Medwell.

In addition to the violation of her privacy, the investigation by Mr. Cunningham’s attorneys revealed the following:

Medwell’s telemedicine component, as needed and well-intended as it was, lacked a viable informed consent protocol.

The consultation with Elizabeth, and as it turned out, hundreds of additional patients in Maryland, Pennsylvania and West Virginia, violated telemedicine regulations in all three states.

Numerous practitioners in the system took part in teleconferences with patients in states in which they were not credentialed to provide that service.

Even if Evan hadn’t cracked open Dr. Johnson’s door and surreptitiously recorded her conversation with Elizabeth, the Medwell telehealth system was found to be insecure — yet another violation of HIPAA.

The amount sought in the class action was $100 million. In an era of social inflation, with jury awards that were once unthinkable becoming commonplace, Medwell was standing squarely in the crosshairs of a liability jury decision that was going to devour entire towers of its insurance program.

Adding another layer of certain pain to the equation was that the case would be heard in Baltimore, a jurisdiction where plaintiffs’ attorneys tended to dance out of courtrooms with millions in their pockets.

That fall, Rand sat with his broker on a call with a specialty insurer, talking about renewals of the group’s general liability, cyber and professional liability programs.

“Yeah, we were kind of hoping to keep the increases on all three at less than 25%,” the broker said breezily.

There was a long silence from the underwriters at the other end of the phone.

“To be honest, we’re borderline about being able to offer you any cover at all,” one of the lead underwriters said.

Rand just sat silently and waited for another shoe to drop.

“Well, what can you do?” the broker said, with hope draining from his voice.

The conversation that followed would propel Rand and his broker on the difficult, next to impossible path of trying to find coverage, with general liability underwriters in full retreat, professional liability underwriters looking for double digit increases and cyber underwriters asking very pointed questions about the health system’s risk management.

Elizabeth, a strong young woman with a good support network, would eventually recover from the damage done to her.

Medwell’s relationships with the insurance markets looked like it almost never would. &


Risk & Insurance® partnered with Allied World to produce this scenario. Below are Allied World’s recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

The use of telehealth has exponentially accelerated with the advent of COVID-19. Few health care providers were prepared for this shift. Health care organizations should confirm that Telehealth coverage is included in their Medical Professional, General Liability and Cyber policies, and to what extent. Concerns around Telehealth focus on HIPAA compliance and the internal policies in place to meet the federal and state standards and best practices for privacy and quality care. As states open businesses and the crisis abates, will pre-COVID-19 telehealth policies and regulations once again be enforced?

Risk Management Considerations:

The same ethical and standard of care issues around caring for patients face-to-face in an office apply in telehealth settings:

  • maintain a strong patient-physician relationship;
  • protect patient privacy; and
  • seek the best possible outcome.

Telehealth can create challenges around “informed consent.” It is critical to inform patients of the potential benefits and risks of telehealth (including privacy and security), ensure the use of HIPAA compliant platforms and make sure there is a good level of understanding of the scope of telehealth. Providers must be aware of the regulatory and licensure requirements in the state where the patient is located, as well as those of the state in which they are licensed.

A professional and private environment should be maintained for patient privacy and confidentiality. Best practices must be in place and followed. Medical professionals who engage in telehealth should be fully trained in operating the technology. Patients must also be instructed in its use and provided instructions on what to do if there are technical difficulties.

This case study is for illustrative purposes only and is not intended to be a summary of, and does not in any way vary, the actual coverage available to a policyholder under any insurance policy. Actual coverage for specific claims will be determined by the actual policy language and will be based on the specific facts and circumstances of the claim. Consult your insurance advisors or legal counsel for guidance on your organization’s policies and coverage matters and other issues specific to your organization.

This information is provided as a general overview for agents and brokers. Coverage will be underwritten by an insurance subsidiary of Allied World Assurance Company Holdings, Ltd, a Fairfax company (“Allied World”). Such subsidiaries currently carry an A.M. Best rating of “A” (Excellent), a Moody’s rating of “A3” (Good) and a Standard & Poor’s rating of “A-” (Strong), as applicable. Coverage is offered only through licensed agents and brokers. Actual coverage may vary and is subject to policy language as issued. Coverage may not be available in all jurisdictions. Risk management services are provided or arranged through AWAC Services Company, a member company of Allied World. © 2020 Allied World Assurance Company Holdings, Ltd. All rights reserved.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]