As Insurers Retreat, the Hamptons Becomes a Test Case for Climate Risk

It has never been more expensive to buy into the Hamptons. In late 2025, the median sales price hit a record $2.34 million, with sales above $10 million soaring 75 percent from the previous year. On paper, one of America’s most climate-exposed luxury markets has never looked stronger, even as the risks beneath it continue to grow. 

The same coastline looks starkly different when viewed through the eyes of an insurance broker. National and regional carriers have stopped writing new homeowner coverage in eastern Suffolk County and, increasingly, across Long Island. “In terms of underwriting, this is the worst market I’ve experienced,” Dermot Dolan of Hamptons Risk Management in Bridgehampton, a 30-year industry veteran, told The Southampton Press in November 2024. New York’s stopgap, the Coastal Market Assistance Program (C-MAP), now serves as a last resort for homeowners whose carriers have withdrawn coverage. Data from the Senate Budget Committee published in December 2024 lay bare the trend. Out of the 100 U.S. counties with the highest home insurance non-renewal rates in 2023, 82 were coastal or wildfire-prone. The underlying message could not be clearer. Climate risk is no longer hypothetical, and insurers are voting with their feet by repricing—or withdrawing from—the most exposed markets.

At first, record prices alongside disappearing insurance may seem contradictory. However, this view overlooks the underlying dynamics. Insurance typically shapes property markets through strict mortgage requirements. Under normal conditions, lenders demand coverage, premiums dictate carrying costs and uninsured homes simply cannot be financed. In the Hamptons, this mechanism is completely bypassed. Driven by Wall Street wealth, the ultra-luxury market is currently booming with all-cash deals from buyers flush with liquidity. Without a lender, the insurance mandate disappears from the transaction and becomes a private responsibility for the buyer. The physical risk remains. It has simply been privatized.

This migration is now visible in how some of the country’s largest private fortunes manage coastal property. Donald Poster, who leads Aon’s family office practice, described this new playbook to Crain Currency. Families with unmortgaged legacy properties are buying $20 million or $50 million of coverage on a $100 million house and using their own liquidity to self-insure the rest. Hardening measures that were once simple recommendations are now what underwriters call “subjectivities,” meaning mandatory conditions of coverage. Parametric policies, which pay out on a trigger event rather than an adjusted claim, are viable only where there is no lender to object. Erosion, the risk that defines every shoreline, is gradual and not insurable at all. And there is a ceiling even for the largest balance sheets. Spending $1 million annually to insure a $100 million home is a scenario where many walk away from a purchase, Poster noted.

Look closely at that playbook and a familiar institution comes into focus. Underwriting judgment, risk engineering, catastrophe response and even pre-positioned private firefighting capacity are the functions of an insurance company, reassembled inside a family office. The carriers did not stop performing these functions because the risk disappeared. They repriced the risk, and the owners who could afford it took those functions in-house.

The broader market is adopting similar strategies. The major carrier Nationwide exited the high-net-worth private client segment in 2023. In California, the Surplus Line Association reported a 119 percent increase in homeowner transactions in the surplus lines market, where pricing is unregulated and coverage is discretionary, during the first half of 2025. Swiss Re’s 2026 sigma report described the rise in insured losses as structural rather than cyclical. This shift did not occur because coastal areas suddenly became more dangerous, but because risk models now reflect actual conditions. As risk becomes visible, it is priced and must be absorbed. This process ultimately shifts climate risk from shared pools to private individuals. The Hamptons perfectly exemplifies this trend. It is where this massive transfer of risk is most pronounced, yet least visible in property prices.

For families holding coastal assets across generations, the arithmetic underneath is uncomfortable. First Street’s February 2025 analysis projects $1.47 trillion in net U.S. property value losses by 2055 as insurance costs and shifting demand reprice exposure, with 84 percent of neighborhoods affected to some degree. A legacy house is held on a 50-year horizon and underwritten 12 months at a time. The gap between those two clocks was the subject of the Yale Law Journal’s December 2025 essay on the climate threat to property insurance, and it is why insurability now belongs on the family office investment committee’s agenda rather than the property manager’s. Which assets does the family underwrite itself, at what loss limit, with how much capital held against the answer? What does hardening cost, and what does it return in premium and in insurability? Which holdings does the next generation actually want to inherit along with their risk? These are capital allocation questions, and the families answering them earliest are treating adaptation spending as an investment rather than a cost. Like Norges Bank Investment Management’s—the world’s largest sovereign wealth fund—approach to nature risk, they view resilience as a precondition for long-term returns rather than a gesture toward them. 

This is beginning to change what wealth management means. For a generation, it meant asset allocation, tax and succession. The next version adds insurability as a standing column, held next to liquidity and yield, because an asset that cannot be insured cannot reliably be owned or passed on. An heir now inherits the underwriting file along with the deed. The families treating that file as a portfolio input rather than a household expense are the ones most likely to still hold the coast in 30 years.

The insurance industry spent 40 years underwriting the assumption that coastal conditions would revert to a predictable baseline. As I wrote for Observer in May, that assumption has been abandoned by the institutions that priced it, from reinsurers to sovereign capital. What the East End shows is the same retirement reaching private wealth. Record prices in the Hamptons are not evidence that capital disagrees with the insurers’ assessments; instead, they show how those assessments are absorbed in a market with enough liquidity to handle them privately. For decades, buyers focused on a property’s value at closing. Now, the critical question is who assumes the risk when insurers will not. On the East End, that responsibility is already embedded in the deed.