Analysis
Insurance is leaving the coast. Mortgages may follow
Insurers are withdrawing from flood-prone areas faster than governments can step in. Banks are starting to notice.
Economics editor
9 min read
Homes on the coast where two insurers stopped offering new policies this year.
In some coastal towns, it is now easier to buy a house than to insure one. Three major insurers have stopped writing new flood policies in areas they classify as high risk.
Without insurance, most banks will not lend. Without lending, house prices fall. The chain reaction has begun.
A slow-moving crisis
Unlike a storm, this crisis unfolds in contract renewals and credit committees. Estate agents in affected towns report that sales now take twice as long, and that cash buyers are negotiating discounts of up to 20%.
“The sea has not reached these houses. The spreadsheet has,” said a mortgage adviser.
Public backstops
Several governments run reinsurance schemes to keep cover affordable. Most were designed for rare disasters, not permanent risk, and their funding is under pressure.
Tomasz Wren
Economics editor
Tomasz writes about money, work and why the numbers rarely tell the whole story.
