While visiting family in St. Petersburg, Florida, in November 2024, I found myself walking down a quiet residential street in Shore Acres, a low-lying, bayfront neighborhood not far from where I grew up.

Two months earlier, Hurricane Helene had sent several feet of water into homes here, even though the center of the storm had stayed far offshore. Just days after Helene, Milton made landfall nearby as a major hurricane, inflicting substantial wind damage.

What I saw on that autumn morning was a scene of starkly unequal neighborhood recovery: Dozens of older homes, most built during the area’s postwar building boom, were in a state of shocking disrepair. Shattered drywall, warped kitchen cabinets, broken glass – entire interiors poured out into the street in piles, at times as high as I am tall.

On the same street, I also saw pristine newer homes that looked untouched. Raised on posts far above their neighbors – in line with newer building codes – there was no sign that a major storm had recently clawed through the neighborhood.

As the sound of buzz saws and hammers rang in my ears, I noticed “for sale” signs in front of many storm-damaged homes. Building back after a storm is a trying business, and it appeared some had called it quits.

For over a decade I’ve been researching how property markets adapt to the changing financial realities of climate change in Florida, the Netherlands and beyond. On this street, I saw a community slowly unraveling as climate shocks – and the subsequent market responses to them – have reshaped the cost of living.

These costs are driven by more than major disasters. Soaring property insurance rates are repricing life in the Sunshine State, and this is likely to worsen as hurricanes intensify in the coming years. But the current way we manage these risks and costs isn’t the only option.

In Shore Acres and elsewhere, the climate crisis becomes tangible when you receive your annual homeowners insurance bill. Sustained, year-over-year price increases have been well documented in Florida and other states. It isn’t uncommon to hear local news stories about neighbors who are seriously struggling to keep up with insurance payments. Nor is it surprising to learn that a neighbor has been dropped by yet another insurer, or that they’re being asked to replace their roof if they want coverage from a new carrier.

These seemingly mundane experiences reflect the structural importance of insurance in our housing finance and climate risk management systems in the United States and beyond.

In Florida, where individual and collective fortune is built on property value and housing markets, insurance markets are particularly vital.

Without insurance, you and I wouldn’t be able to get – or keep – a mortgage. Without mortgages, buyers would lose access to a market, causing home prices to fall. The real estate market, and all the jobs wound up in it, would stutter. The property tax base would fall, and with it, local governments’ budgets would drop. A downward financial spiral ensues.

Even those who can afford to stay suffer losses in home equity and lifestyle as the community around them disintegrates or disappears. This played out during the 2008 subprime mortgage crisis and subsequent economic recession.

And this isn’t just a problem for homeowners – costly insurance also affects renters and affordable housing providers, as landlords pass on costs to tenants, defer maintenance, postpone new building or face financial distress.

Some individuals, neighborhoods and cities can afford to pay their way out of this spiral. They can build costly infrastructure to mitigate storm damage, absorb losses and rebuild after a disaster.

Case studies from Miami show how climate risk already is beginning to sort neighborhoods by wealth, resilience and insurability. High insurance costs could further push affordable homeownership out of reach in places like Miami Gardens and similar communities, where housing costs are on the rise. Meanwhile, investors are buying elevated land that is less likely to flood in communities like Little Haiti, displacing communities and limiting their access to affordable housing.

Homeowners rely on insurance to pool risks so that no individual absorbs the full cost of a shock. But as for-profit insurers look to protect themselves from growing losses, they necessarily become much more selective about who gets protection and at what cost.

But this piecemeal, property market-driven form of adaptation defers a larger and more expensive collective reckoning: What happens if larger numbers of residents can no longer afford to stay, or otherwise decide the risks are too high, and move elsewhere? Where do they go, and what becomes of the places they leave behind?

In other words, risk sharing becomes risk sorting. And without strong mechanisms to counter this, a split occurs in places like Shore Acres. Florida’s coastal communities already are showing signs of this “splintering protectionism” – a patchwork of individuals and neighborhoods that are financially protected or excluded under growing climate risk.

These patterns often recall and reinforce historic forms of racial and economic injustice in Florida housing markets and more broadly in the U.S.

One immediate response would be to create public policies that make adaptation and insurance work better together. In other words, homeowners need help both with storm-proofing their homes to reduce damage up front and with paying to repair and rebuild when necessary after a storm.

The state of Florida has gradually built a complex system of semipublic insurance institutions, but it hasn’t meaningfully tackled resilience at the home and neighborhood scale. Efforts to stimulate private financial market solutions for homeowners have proven challenging, in part because individuals and private markets cannot coordinate comprehensive community adaptation strategies.

Many U.S. and international reform proposals focus on linking insurance backstops, such as expanded public insurance options, to concrete measures that stimulate home- and community-level resilience, including stronger building codes, home retrofitting, new infrastructure and better spatial planning.

These proposals recognize that leaving decisions about adapting houses located in vulnerable areas up to individual homeowners is ineffective. Those who can afford it may make expensive updates to their homes if they think the risks are high enough, but those who can’t afford it are simply out of luck.

Public institutions like the housing resilience agencies proposed by the Climate and Community Institute could help connect insurance and adaptation in new ways. Extensive international case studies also provide a rich basis for reimagining our insurance and resilience institutions.

Local, state or even federal versions of these agencies could offer consumer insurance for individuals alongside adaptation investment programs as a one-stop shop. These agencies could pool risks through a single-payer insurance system and reduce those risks through investment in resilience measures. As government agencies, they would be focused on long-term safety and affordability rather than making a profit.

Such agencies could also incorporate transparent and democratic decision-making, giving more power to communities over decisions that are typically “black-boxed” by private market actors.

Regardless of how Florida chooses to move forward, insurance reform debates should not lose sight of these fundamental questions: What, and who, are we trying to protect, on what time horizon, and at what costs?

The current system is already answering these questions, deciding the fate of Shore Acres and any number of similar communities. The risk-sorting dynamic that’s driving adaptation is also opening new and deepening existing financial fault lines in neighborhoods like this. On one side are those who can afford high insurance rates and the costs of protective measures, such as storm shutters. On the other side are those who can’t afford insurance or to rebuild their ruined homes after a storm.

I believe Florida’s challenge is not simply to stabilize insurance markets, but to create new forms of collective protection that connect finance, risk reduction and decisions about how communities live with climate risk.

This article is republished from The Conversation, a nonprofit, independent news organization bringing you facts and trustworthy analysis to help you make sense of our complex world. It was written by: Zac Taylor, Delft University of Technology

Read more:
The big reason Florida insurance companies are failing isn’t just hurricane risk – it’s fraud and lawsuits

To insure or self‑insure? The question homeowners must answer amid impact of climate change

Americans face an insurability crisis as climate change worsens disasters – a look at how insurance companies set rates and coverage

Zac Taylor has also been compensated for their contributions as a Fellow at the Climate and Community Institute, a US-based climate and economy think tank, and to the Urban Land Institute, an international membership organization of land use professionals.