Surfside Collapse’s Economic Impact: Financial Consequences of the Champlain Towers South Tragedy

Last Updated on July 21, 2021

MyFinancialTimes is a reader-centric site. We may receive compensation from the products and services we mention or recommend in this story, but the opinions are the author's own. Remuneration may impact where offers appear. We may not include all available products or offerings. To learn more you can visit our advertising policy and editorial policy.

The Surfside collapse is most striking, of course, for the human tragedy: for the lives cut short and the families plunged into grief. 

Yet, as the community mourns, local, state, and federal officials also must deal with another less direct (economic) impact: the business and financial consequences of the disaster at Champlain Towers South, in Surfside, a town just north of Miami Beach.  

The Secretary of Florida’s Department of Economic Opportunity, Dane Eagle, has spent a lot of time in Surfside of late, much of it by the side of his boss, Governor Ron DeSantis. Eagle has been assessing the needs of the area, and what he and the state can do about it. 

The DEO has set up shop, in the form of a mobile business recovery center in the middle of the town’s business district. It has been looking to lend money to the business owners who have taken those collateral hits.  

Eagle told NBC recently that more than a dozen businesses have applied for loans after the Surfside collapse. It is a small town, as he noted. According to the 2020 census, its population was less than 5.600 and a response that quickly shows the depth of the impact. 

Surfside Emergency Street Closures

After the collapse on June 24 authorities had to close down a perimeter around the disaster site in order to assure unobstructed access by first responders as well as to make sure civilians didn’t get too close to the site, putting themselves in danger. 

The first responders needed a lot of room just to store emergency vehicles, construction equipment, and other necessary items. These closures have been, to be blunt, very bad as an economic impact.

Champlain Towers South Financial Impact
The Champlain Towers South collapse wasn’t just devastating economically to the residents – it was also devastating financially to the neighborhood. Photo credit: Shutterstock.com

A public information officer for the Miami-Dade Police Department has been quoted acknowledging this. “You have to maintain that perimeter for safety, but we realize it’s a double-edged sword. You’re hurting people that are not directly involved with this. We get that and hope to minimize the pain.”   

Surfside and Miami Beach share a sandbar, a narrow strip of land just offshore the main southeast Florida coast, connected by a series of bridges. It is at all times a complicated area in which to move about. The emergency street closures have made it a nightmare for business owners, customers, or residents to get in and out of Surfside’s downtown. 

The owner of a salon on the downtown’s Harding Street reports that “customers are canceling, turning around, saying “I’m not coming.” The nightmare is worsened by the fact that this is coming just as the pandemic seems to be loosening its hold. The pandemic devastated businesses in Surfside, and those who stayed afloat did so by going deeply in debt.    

How Will the Insurance Companies React?

The Surfside collapse raises a question many such disasters raise: how will the insurance companies react? This isn’t just a matter of “will they pay what they owe to legitimate claimants?” 

The bigger question is, “will this, combined with other recent high-cost insured events in Florida of late, cause property insurers to flee the state, or its most vulnerable coastal areas? And, if so, what will be the economic impact of that flight?”

Within days of the Surfside collapse, insurance companies were sending letters to the owners of buildings in the region threatening to cut off coverage if the older buildings did not pass safety inspections. 

There is talk of whether the Surfside collapse is the result of climate change. There is evidence of a gradual “subsidence” of the structure, as if it was built on a slow-motion sinkhole, The 13-story complex, built in 1981, had been sinking at a rate of one to three millimeters a year. 

If this has any connection to climate change, that makes talk of insurance company flight part of a much larger pattern. In the West, regulators say they’ve seen reports of insurers refusing to renew policies in fire-prone areas. But in the big picture, they can’t really flee. So many companies and politicians are left with an economic disaster on their hands, one that will take years to repair.