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Steve Rosenthal escaped with his life when his condo building in Florida crumbled and left him homeless last month, but he still owes more than $100,000 on his mortgage.

Mr. Rosenthal, a 72-year-old restaurant advertising executive, soon received two small insurance checks for living expenses and personal property, but he was still waiting for his big payout. He expects it to be over six figures, but it will probably go to the bank to pay off the mortgage on a condo that no longer exists.

“We’re all freaking out,” he said of survivors of the partial collapse of Champlain Towers South in Surfside. “I don’t want to dip into savings that I wasn’t supposed to touch until I’m 80.”

For Mr. Rosenthal and other survivors of the collapse, sorting out complicated insurance payouts is but one part of starting over after a catastrophic loss. And his fellow Floridians may soon be feeling the shock waves from the tragedy, as spooked insurance companies begin scrutinizing the buildings they are covering, raising rates that are already among the highest in the nation, or canceling coverage altogether.

The Surfside collapse, which killed at least 97 people, is causing new turmoil in Florida’s troubled insurance market, further jeopardizing a coastal housing economy that was already under pressure from climate change. And it adds to growing concern among economists about a new issue in the climate crisis: whether some parts of the United States are becoming too risky to insure, at least at a cost that most people can afford.


Steve Rosenthal has been living at a hotel since the building collapsed last month.Credit…Scott McIntyre for The New York Times

That shift has already started. Days after the collapse, insurance companies sent letters threatening to cut off coverage to older buildings that did not pass mandatory safety inspections. In California, insurers have begun fleeing fire-prone areas; in other parts of the West, officials say they are seeing similar reports of insurers refusing to renew policies.

And it is not just private insurers: In April, the federal government outlined changes to the heavily indebted National Flood Insurance Program that will eventually cause some people’s premiums to rise fivefold or more.

“Coastal areas all across the Gulf and up along the East Coast could start to see very similar dynamics” to what is happening in Florida, said Carolyn Kousky, executive director of the Wharton Risk Center at the University of Pennsylvania.

It is too soon to say whether climate change contributed to the collapse of the building in Surfside. But the effects of global warming, which include extreme heat and more moisture in the air, cause structures to deteriorate more quickly, according to Jesse Keenan, a professor at Tulane University who specializes in the consequences of climate change for the built environment.

“Climate change is actually accelerating the degradation of buildings,” Dr. Keenan said.

Florida has long been a test case for how the insurance industry responds to disasters. After Hurricane Andrew devastated Southeast Florida in 1992, more than a dozen insurance companies went out of business.

Since then, the willingness of private insurers to offer coverage in Florida has waxed and waned, often in response to storms. The current market is tighter than at any point since 2003 or 2004, according to Adam Lopatin, senior vice president at USI Insurance Services.

“It all comes down to profitability for the insurance companies,” Mr. Lopatin said. “And right now, writing business in Florida is not profitable.”

After massive claims from Hurricane Irma in 2017 and Michael in 2018, insurance companies have been losing money for years, and those losses were growing. Many insurers started dropping customers in high-risk areas, and refusing to take on new ones. In some parts of the state, it has become all but impossible for homeowners to buy private insurance.


Widespread destruction in Mexico Beach, Fla., after Hurricane Michael exited the Florida Panhandle in 2018.Credit…Johnny Milano for The New York Times

Part of the problem, especially in Southeast Florida, is the lingering effect of Irma, which led to a burst of expensive claims, especially for roof repairs. But insurers are also being squeezed by the rising cost of what is called reinsurance — insurance that insurance companies themselves buy, to protect themselves against higher-than-expected losses in any given year. The cost of that reinsurance has surged as climate change leads to more frequent and intense disasters around the world.

As the cost of doing business went up in Florida, many insurers started expanding into other coastal states, hoping their experience with hurricanes would help them make money in places like Louisiana, according to Joseph L. Petrelli, president of Demotech, a company that rates the financial health of insurers.

That strategy backfired last year, when Louisiana got walloped by five named storms, the most to hit that state in a single season. The insurers wound up losing even more money.

By the end of last year, almost half of the Florida insurers rated by Demotech had to raise additional money from investors to stay afloat, Mr. Petrelli said.

The collapse in Surfside could put still more pressure on companies to stop taking new customers in condominiums and drop some of the people they already cover, Mr. Petrelli said.

That is because in addition to the risk of storms, insurers now have to worry about whether the information they have about any particular building — how well it was constructed and whether any damage has been detected and repaired — is accurate.

“Now you have to question, is the construction of this building really what it’s been asserted to be?” Mr. Petrelli said. That uncertainty could give insurers pause about the ability of similar buildings to withstand a hurricane or other threat, he said.

There are indications that it is already happening.


A 2018 engineering report noted structural concerns with the concrete and steel reinforcements in Champlain Towers South. Investigators are still working to determine how the building collapsed last month.Credit…Angel Valentin for The New York Times

Jim Gorman, chief executive of American Property Insurance, said that since the building in Surfside collapsed, his company has started getting more calls from insurance brokers trying to find new coverage for clients that have either had their insurance canceled or seen their rates go up.

“I can tell just from the pickup in quote traffic that the property market in general is becoming much more restrictive,” Mr. Gorman said.

The shift since the collapse in Surfside comes on top of private insurers who were already dropping homeowners. In April, Tim Weldon got a letter from his insurance company, telling him it would stop covering his house in Boynton Beach once his insurance contract ended in June — just as hurricane season was starting.

Mr. Weldon, who had been in a dispute with his insurer about paying for roof damage during Hurricane Irma, has not been able to find insurance with other private companies. “It doesn’t look like anybody’s going to cover me,” he said.

As private insurers pull back, more homeowners are buying coverage from Citizens Property Insurance, a state-owned entity that was meant to be the insurer of last resort — a backstop for people who could not find coverage on the regular market.

Now, instead of being a backstop, Citizens provides more residential insurance policies than almost any private insurer in Florida, according to state data.

Frequently Asked Questions

It could take months for investigators to determine precisely why a significant portion of the Surfside, Fla., building collapsed in the middle of the night on June 24. But there are already some clues about potential reasons for the disaster, including design or construction flaws. Three years before the collapse, a consultant found evidence of “major structural damage” to the concrete slab below the pool deck and “abundant” cracking and crumbling of the columns, beams and walls of the parking garage. Engineers who have visited the wreckage or viewed photos of it say that damaged columns at the building’s base may have less steel reinforcement than was originally planned.

Condo boards and homeowners’ associations often struggle to convince residents to pay for needed repairs, and most of Champlain Towers South’s board members resigned in 2019 because of their frustrations. In April, the new board chair wrote to residents that conditions in the building had “gotten significantly worse” in the past several years and that the construction would now cost $15 million instead of $9 million. There had also been complaints from residents that the construction of a massive, Renzo Piano-designed residential tower next door was shaking Champlain Towers South.

Even though Florida’s high-rise building regulations have long been among the strictest in the nation so they could stand up to hurricane winds, flooding and rain, along with the corrosive effects of salty air, evidence has mounted that those rules have been enforced unevenly by local governments. Engineers are conducting a thorough review of Champlain Towers North, a nearly identical building, to determine whether it could also be vulnerable. In nearby North Miami Beach, residents of the Crestview Towers were swiftly evacuated after a report documented cracks and corrosion in the building’s structure. And Bal Harbour 101 is spending an estimated $4.5 million in repairs. Now, residents throughout the region who long glamorized oceanfront condos are debating whether they should put their homes on the market.

Entire family units died because the collapse happened in the middle of the night, when people were sleeping. The parents and children killed in Unit 802, for example, were Marcus Joseph Guara, 52, a fan of the rock band Kiss and the University of Miami Hurricanes; Anaely Rodriguez, 42, who embraced tango and salsa dancing; Lucia Guara, 11, who found astronomy and outer space fascinating; and Emma Guara, 4, who loved the world of princesses. A floor-by-floor look at the victims shows the extent of the devastation.

A 15-year-old boy and his mother were rescued from the rubble shortly after the building fell. She died in a hospital, however, and no more survivors were found during two weeks of a search-and-rescue mission. There had been hope that demolishing the remaining structure would allow rescuers to safely explore voids where someone could possibly have survived. But only bodies were found. There were 94 confirmed victims through July 12.

But those policies offer less coverage for various types of damage. And because they are ultimately backed by the state government, taxpayers could be on the hook if a major hurricane overwhelmed the ability of Citizens to pay claims.

“If there are catastrophic losses, the backstop there is not some sophisticated reinsurance market — it’s the citizens of Florida,” Dr. Keenan of Tulane said. “And it could be totally devastating.”

If Florida’s coastal homeowners and officials want to avoid an uninsurable future, they can take steps to reduce the risk, like further tightening building codes, increasing inspections or restricting development near the beach, said Ernst Rauch, the chief climate scientist at Munich Re, one of the world’s largest insurance companies.

But he said something needs to change, or higher insurance costs are inevitable, especially as climate change gets worse.

“We need to reduce the vulnerability of our societies,” Mr. Rauch said. “Living by the water is not necessarily sustainable.”

For the people who lived at Champlain Towers South, any insurance payout is likely to be limited. While many residents had individual policies on their furniture and other belongings, the bigger payouts must come from the mega-policies on the building itself. Lawyers for the condominium association and its insurers have said that the complex had about $30 million in property coverage and $18 million in liability coverage.

Judge Michael A. Hanzman of the Circuit Court in Miami-Dade County, who is handling the cases filed against the building, said that $48 million “will obviously be inadequate to compensate everyone fully to the extent of their harm.”

The pot of money could grow if the land where the Champlain Towers South once stood, worth an estimated $100 million to $130 million, is sold. At a hearing on Wednesday, Judge Hanzman gave approval for a court-appointed receiver to begin the process of selling the property.

“I want you to be proceeding forward, with whatever needs to be done to monetize that property, so we can get money into the hands of these people,” Judge Hanzman said.

Brad Sohn, a lawyer representing at least one survivor of the collapse, said condo associations should be required to have far larger coverage for something as devastating as a collapse.

“When catastrophic events happen in Florida, there need to be firmer laws in place forcing people to be financially responsible, to have larger insurance policies so people are not left hanging out to dry,” Mr. Sohn said.

Susana Alvarez, 62, who escaped the building’s collapse and is living for now in a rental, said she worries that she will not be compensated for the $150,000 in renovations she put into her unit, including a new kitchen, floors and windows.

“It’s not about what I paid to own the apartment,” she said. “It’s about what it’s worth now.”

Mr. Rosenthal has a similar worry. When he first bought his 1,560-square-foot unit in 2001, hoping to spend the rest of his life there, he paid $250,000 for it; the unit’s reappraisal two years ago put its value at $650,000.

He would at least like to be able to pay off his mortgage, and with that in mind, he has joined one of several lawsuits against the building’s condo association. The survivors, he said, will look well beyond the building’s limited insurance policy, “suing anybody and everybody that’s involved.”

Rick Rojas, Mike Baker and Sophie Kasakove contributed reporting.

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