While current property flood risk disclosure requirements are set at the state level and can vary quite significantly, Morgan Stanley analysts note how some states have begun implementing more stringent conditions following recent major events.
Texas, for example, revised its flood risk disclosure requirements following Hurricane Harvey, with property owners now required to disclosure whether the property is located in a 500-year floodplain, a flood pool, in or near a reservoir, and whether the home has flooded before.
Previously, property owners were only required to disclose if the property was in a 100-year floodplain.
Concurrently, analysts say the decision by some major US insurers to exit certain catastrophe-prone markets suggest a heightened awareness of increasing climate risk.
Both AIG and Zurich have started to considerably pull back exposure from certain markets prone to catastrophe losses and, given the size of the firms, their strategic exits from these markets is helping to push rate momentum.
Meanwhile, analysts believe pricing pressure for property insurance coverage is likely to continue increasing.
While industry-wide commercial lines pricing is tracking up by around 10-15% in some markets, insurance companies believe that these gains are likely insufficient given concerning loss trends.
Analysts note that some commercial real estate owners have seen insurance costs increase well into the double-digits around major climate events,and recent commentary suggests pricing pressure is not likely to abate.