Blame it on global warming if you wish, but two extended hurricane seasons in a row with Katrina as the centerpiece, has resulted in massive hikes in insurance premiums for windstorm and flood-related catastrophe. According to the rate trackers, premiums for windstorm and flood insurance in coastal areas – especially in the southeast – have increased anywhere between twenty five and four hundred percent since the hurricane season officially began on June 1st.

A similar hike in deductible levels for property loss is occurring, with deductibles averaging 10 to 15 percent of property value as opposed to 2 to 5 percent last year. And some underwriters are getting out of the field altogether, declining to provide coverage for damages caused by storms of this nature. That would seem to indicate that at least some insurance companies see a long term pattern here, as opposed to a short term aberration such as a drought.

The steep boost in insurance rates represents a major problem for commercial real estate4 companies, as they legally cannot pass through insurance increases to tenants. Investors that have been riding the real estate boom often have heavily leveraged financial arrangements, and a massive increase in insurance could make some loans untenable. Florida has been a center of the real estate boom in recent years; it has been the center of hurricane season for centuries.