That’s what happened in Florida. Hurricane Andrew reduced parts of cities to landfill and cost insurers nearly $16 billion in payouts. Many insurance companies, recognizing the likelihood that it would happen again, declined to renew policies and left the state. So the Florida Legislature created a state-run company to insure properties itself, preventing both an exodus and an economic collapse by essentially pretending that the climate vulnerabilities didn’t exist.
As a result, Florida’s taxpayers by 2012 had assumed liabilities worth some $511 billion — more than seven times the state’s total budget — as the value of coastal property topped $2.8 trillion. Another direct hurricane risked bankrupting the state. Florida, concerned that it had taken on too much risk, has since scaled back its self-insurance plan. But the development that resulted is still in place.