The Rising Cost of Insurance—What Developers and Investors Need to Know

Where Insurance Premiums Are Set to Skyrocket

As real estate developers and investors, understanding risk is critical to making informed decisions. One of the biggest challenges facing property owners today is the rapid rise in insurance premiums—especially in areas prone to natural disasters.

A new analysis from climate risk firm First Street projects staggering increases in home insurance costs over the next 30 years. Some of the hardest-hit cities include:

• Miami, FL: +322%

• Jacksonville, FL: +226%

• Tampa, FL: +213%

• New Orleans, LA: +196%

• Sacramento, CA: +137%

These jumps are largely attributed to the growing risks of hurricanes (Florida and Louisiana) and wildfires (California).

The Insurance Market Is Underpriced—For Now

Jeremy Porter, head of climate implications research at First Street, notes that many home insurance policies are already underpriced relative to risk due to state-imposed rate restrictions. This has led to steep losses for insurance carriers, who have paid out more in claims than they’ve received in premiums each year since 2020.

To correct this, national home insurance premiums are expected to rise by 29.4% by 2055, factoring in both an 18.4% correction for current underpricing and an 11% increase due to rising climate risks.

Flood Insurance: An Additional Cost Burden

While traditional homeowners’ insurance covers wind, hail, and fire damage, it does not include flood coverage—another major risk factor. By 2055, flood-related damages are expected to rise:

• New Orleans, LA: +533%

• Atlantic City, NJ: +296%

• Fort Lauderdale, FL: +122%

For investors in coastal and flood-prone markets, insurance costs will increasingly influence investment decisions and profitability.

What This Means for Developers and Investors

The rising cost of insurance is creating new challenges and opportunities in real estate. In high-risk markets, we may see:

• More stringent underwriting requirements from insurers

• Higher operating costs for property owners

• Shifts in investment strategies toward lower-risk markets

• Increased demand for resilient, disaster-resistant developments

At Daniel Kaufman Real Estate, we are carefully assessing the impact of rising insurance premiums on market selection, project feasibility, and long-term asset performance.

Daniel Kaufman on Adapting to the Changing Market

“As climate risks drive insurance costs higher, developers and investors must be proactive in identifying resilient markets and designing properties that can withstand these challenges. The key to long-term success is integrating risk mitigation into investment strategies—whether through smart site selection, sustainable design, or partnerships with insurers to secure favorable coverage terms.”

Looking Ahead

With climate risks reshaping the real estate landscape, it’s more important than ever to stay ahead of market trends. At Daniel Kaufman Real Estate, we are committed to helping investors navigate these challenges and uncover new opportunities in resilient, high-growth markets.

Stay tuned for more insights in our next issue.

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