Melissa Harris-Perry: Last month, a 12-story condominium in Surfside, Florida partially collapsed, killing at least 97 people. In the aftermath, survivors of the collapse have not only had to grapple with catastrophic loss of their homes and community, but also the increasingly complicated world of insurance.

For years, the ongoing climate crisis has unsettled Florida's insurance market, and the Surfside collapse is creating new challenges as insurance companies raise rates or cancel coverage altogether. This as they are weighing the risks of both intense storms and now the structural integrity of buildings. For more on all of this, we're joined by Christopher Flavelle, Climate Reporter at the New York Times. Christopher, great to have you with us.

Christopher Flavelle: Thanks for having me.

Melissa Harris-Perry: Let's just start with the broadest possible picture. How is it that insurance companies assess risk when it comes to offering an insurance rate for your home or your condo?

Christopher Flavelle: Sure, they look at a lot of things, but some of the basic things are, number one, where is it? What's the physical exposure to risk, like hurricanes or floods? Then also the structure itself. They want to know what kind of a building are they insuring. The problem here is both those things suddenly seem harder to predict and understand.

Melissa Harris-Perry: Do you know anything at this point about the survivors of this particular collapse and what their experiences have been relative to getting insurance payouts on the loss of their homes?

Christopher Flavelle: It seems like it's going to take some time for this to get resolved with this case, largely because it's so unusual to have not just a total loss of a home or of homes, but also a loss, for this reason, some structural failure. It looks like months at least till competing claims get dealt with.

Melissa Harris-Perry: The real estate market in Florida has been a topic of conversation for, I guess, a decade now. I'm wondering, though, the ways that insurance rates for homeowners in Florida compared to the rest of the nation.

Christopher Flavelle: Florida already had some of the most expensive insurance rates for property insurance anywhere in the country. The numbers I saw, it was seconds just behind Louisiana for the highest rates. Those rates are going up as these threats accelerate.

Melissa Harris-Perry: You just mentioned Louisiana, and I lived in New Orleans in the decade post-Katrina. I'm wondering when you initially were talking about this being so unusual to have this level of catastrophic loss across geographic area like this one is fairly contained but certainly is related to everything in its neighborhood, community, and along that coast. Is what happened with insurance payouts post-Katrina maybe a model for what might be happening here?

Christopher Flavelle: One of the things with climate change and with insurance problem is, in a sense, it's not new. Whether we're talking about previous storms in Louisiana, or certainly previous storms in Florida, like Hurricane Andrew in 1992, the insurance industry has, in a sense, been here before. The industry is built to respond to and ideally cope with massive events and massive losses. I think what's new here is that it's no longer a situation where you have a somewhat regular cycle where you get one big storm or one big loss and then a few years ago by another big storm.

What's happening is those big losses are happening, not just more frequently, but they tend to be more intense, and they're harder to predict. I think the real struggle is insurers still aren't sure how to price that risk. They don't really know what they can charge people so that insurers have enough premium revenue to remain stable as these events become more frequent and more intense. They're responding by, in some cases, just leaving what they view as the most dangerous areas.

Melissa Harris-Perry: Christopher, I remember doing internship in college with an insurance company, and kind of through the training, and I remember being told the way they work is by spreading risk. An insurer will be insuring in Wyoming and in Florida, and the likelihood of a massive storm in Wyoming is pretty low, so you're going to get lots of revenues with very few payouts there. Although certainly higher rates in Florida, you're going to expect to do more payouts there. Why exit altogether? Why not simply spread the risk by being in places we're less likely to get a collapse due to structural integrity as a result in part because of weather changes?

Christopher Flavelle: It's a great question. One of the quaks in Florida is after Hurricane Andrew, again, in 1992, you had a lot of national carriers ultimately decide they just wanted to leave Florida altogether, and so many of the carriers in Florida tend to be, if not companies that only operate in Florida, companies that largely operate in Florida, and so they are especially exposed, but then they also have some sophisticated skills or what seemed like sophisticated skills in terms of predicting hurricanes and storm surge. They did diversify into other states along the coast and that was part of the problem.

Part of the reason that the insurance market in Florida is so shaken right now is that they did diversify into places like Louisiana. Then as the storms got worse in the last few years, their losses grew.

This is such an important point of insurance. You're totally right. They want to spread risk, and they spread risk in part by buying additional insurance through what is called reinsurance, a separate set of companies who exist to provide insurance to insurance companies. Now, the problem with that model is reinsurance is becoming drastically more expensive because almost anywhere you go around the world, you're seeing new kinds of risk and escalating risk, and so that reinsurance is becoming more expensive.

Insurance companies, especially in Florida, are being squeezed on both sides. They've got more risk they're paying out for in terms of storms in Florida, but then they're paying more above them for that secondary reinsurance coverage. Again, many of them are deciding, "You know what, there's just no way we can make money with this. It's easier just to leave."

Melissa Harris-Perry: We started with the Surfside collapse. Now, that seems to be about structural integrity. I must admit, I started out with just an assumption that this is in part about climate change, but maybe I'm wrong. Is the Surfside collapse related to climate change?

Christopher Flavelle: To be clear, right now, we don't know. There are federal investigators and others trying to get as much information as they can about just what caused this collapse, but it'll take a long time to get anything like a final answer. What we do know though, is that, in general, some of the challenges associated with climate change, especially on the coast, could very well also have contributed to what happened with the structural collapse.

One example is something called saltwater intrusion. As seas rise, you get more saltwater moving into the aquifer, the groundwater underneath these coastal structures. The problem with that is salt, of course, is corrosive. It can contribute to the erosion of the foundations. At the same time, the water in the ground under these coastal buildings is rising, and so you get more exposure to water in these foundations.

It's too soon to say definitively, of course, what happened in this building, but certainly, it raises concerns that as seas rise, in particular, you get more exposure along the coast of Florida to these kinds of events, number one. Number two is the concern that perhaps the information that insurance companies had about this particular building was not accurate in terms of how well it was constructed, how recently it was inspected, what the results of that inspection were.

Even if you exclude climate change, insurers still have to worry about the quality of information they have on these coastal buildings. That means there's more transaction costs. They now have to spend more time and money really digging into the records for these coastal buildings. Again, if you're an insurance company in Florida, you're already being besieged by these rising costs. You're not making a lot of money and now you got to spend more time digging into the records of the buildings that you're providing coverage for. It's just more of a headache. Probably, for some cases, will accelerate that retreat from the coast.

Melissa Harris-Perry: There's another perspective I want to grab here because I so appreciate the way that you're helping me to see this from the perspective of insurers, the kinds of risks that they are managing here. I'm wondering, if I'm a homeowner, if if I live in Florida, maybe I'm multi-generations of Florida, maybe I have a very modest home. It's not like my big, fancy, second home retirement on the beach. I'm a working person. I live there. How is this all going to impact my ability to just continue living where I live?

Christopher Flavelle: It's a great concern and a big problem. Right now, you've got a really, really significant shift of homeowners in Florida, especially coastal Florida and higher risk areas in Florida moving away from private insurance companies into what is called Citizens. It's a state-run high-risk pool. It was meant to be a high-risk pool of people who could not get private insurance. It's becoming now almost the default in these areas. The people either can't get private insurance in the first place, or they're getting letters from their insurers saying, "We will drop you at the end of your one-year contract," and they have no option at that point but to go into Citizens.

The problem with Citizens is twofold. Number one, it tends not to be as good coverage, not as comprehensive, sometimes more expensive, but number two, from a statewide level, the backstop for a private insurance company is the market. You want private insurers to make sure that they don't fail in the event of a storm by having re-insurance and other sort of, again, sophisticated financial protections to make sure there's money to pay out people who lose their home.

With Citizens, it's different. The backstop ultimately is Florida taxpayers. In theory, national taxpayers, if the losses were big enough. The concern is that as homeowners in Florida get pushed into this Citizens' plan that, number one, their coverage is not good and number two, there's more exposure for some a catastrophic failure in Florida of the insurance market.

Melissa Harris-Perry: Thank you so much. It's deeply helpful to be able to understand those connections. Christopher Flavelle is a climate reporter at the New York Times. Christopher, thank you so much for joining us.

Christopher Flavelle: Thanks for having me.

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