Rising sea levels, more intense coastal storms and rising construction costs have caused annual home insurance rates in the state of Maine to rise by an average of 15 percent this year, according to a recent report.

That number is expected to rise to 19 percent by year's end, which would be the second-highest increase in the country after Louisiana. In that scenario, average annual premiums in Maine would rise from $1,322 to $1,571, according to Insurify, the online insurance comparison company behind the report.

And while Maine's average insurance rate is still among the lowest in the country (the national average was $2,377 in 2023, according to Insurify), such a rapid increase shows how vulnerable Maine's historically low insurance rates are to both local natural disasters and global and national trends toward rising insurance rates.

As insurance companies face increasing claims payments following severe storms, they are simultaneously faced with rising premiums for reinsuring their own assets. These costs are ultimately passed on to customers in the form of higher premiums.

Both these reinsurance rates and the number of severe storms are expected to increase due to climate change.

The chairman of one of the world's largest reinsurance companies recently said that high insurance costs were still not enough to deter risky investments in areas vulnerable to climate change, even though Insurify analysis shows that insurance premiums nationwide rose by almost 20 percent between 2021 and 2023.

There have been 11 natural disasters in the U.S. so far this year, each causing more than $1 billion in damage. Federal weather officials predicted an above-average hurricane season for 2024, and the earliest Category 5 hurricane on record swept through the Caribbean this week.

In Maine, Greg Thayer, manager at Sanford-based Batchelder Bros. Insurance, said rising insurance costs are not being spread evenly among Maine residents.

“If you look at Maine and see that average insurance premiums are increasing by 19 percent, that’s a bit misleading,” he said The Maine Monitor“You don't see that everywhere. It's really concentrated in places with particularly strong wind events… and a lot of that is caused by the coast.”

Some national insurance companies are already withdrawing from coastal areas. The Quoddy Tides was reported in March, citing destructive winds and flooding.

In addition, the premium increases by insurance companies that remained in Maine do not necessarily explain the catastrophic damage caused by the storms that hit the Maine coast in January and March, Thayer says, nor the extreme flooding that occurred in central and western Maine in December.

Because companies rely on lagged data, their premium costs have only recently begun to catch up with the reality of reinsurance prices and severe storm losses.

The only way to improve your metrics for calculating these risks is to use technologies like Lidar, a laser-based detection technique that can map tree cover in high detail. This can help you identify which homes are at risk of tree damage and optimize insurance premiums for the most vulnerable zip codes.

“I suspect that will change in the next 18 months,” Thayer said. “The declining data will be caught up by 2026… Deductibles are going to rise anyway with inflation alone, and on top of that, people are going to live in windy areas.”

The geographic variance described by Thayer is evident in a working paper published last month by the National Bureau of Economic Research, which used a novel technique for analyzing data on mortgage escrow payments to map the average cost of homeowners insurance premiums by county. (The practice of mapping insurance rates by ZIP code is difficult, according to Bloomberg Greenbecause the insurance companies resisted it.)

The map of Maine shows yellow spots on the state's mountain ridge. They include Piscatquis and Franklin counties, along the central coast of Maine, from Lincoln County to Hancock County, and into York County.

Yellow represents higher premiums between $1,500 and $2,000, while light green indicates premiums between $1,000 and $1,500 for the rest of the state.

“The map shows a clear increase in insurance costs, with higher insurance burdens in the riskiest coastal areas along the Gulf of Mexico and the East Coast,” write researchers Benjamin J. Keys and Philip Mulder.

However, rising premiums shouldn't stop Maine homeowners from looking for cheaper policies, Thayer said.

“Everyone can expect their policies to go up,” Thayer said. “If they see a policy go up 20 percent, it's probably a good idea” to rethink their plan. But changes of 8 to 10 percent are a baseline to expect.

In a June update from the Maine Climate Council, state experts reiterated that all Maine insurance sectors – not just home insurance – need to be thoroughly analyzed to guide local development decisions and address the risks associated with climate change.

These are precisely the considerations that some reinsurance companies are aiming for: an orderly withdrawal from disaster-prone areas and an infrastructure that is more resilient to climate change.

“Risk reduction through adaptation promotes insurability,” said an economist at a global reinsurance company.

Emmett Gartner

Emmett Gartner covers accountability and Maine's rural communities as a Scripps Howard Fund Roy W. Howard Fellow. Emmett earned his master's degree in journalism from the University of Maryland's Philip Merrill College of Journalism and his bachelor's degree in environmental studies from the University of Vermont. While a reporter at the Howard Center for Investigative Journalism, he helped produce two award-winning investigations: “Printing Hate,” which documented the historic role of newspapers in inciting racist lynchings, and “Mega Billions,” which examined the state's lottery operations. Most recently, Emmett covered health and the environment for The Frederick News-Post in Maryland. Previously, he worked for the U.S. Forest Service in Oregon and interned with the National Oceanic and Atmospheric Administration on Maryland's Eastern Shore.