New York City Mayor Michael Bloomberg announced an ambitious,multi-decade plan that would put $20 billion toward protecting thecity against natural disasters caused by climate change.

The city currently has 535 million square feet of homes andbusinesses and 400,000 residents lining the coast, many of whichare still reeling from the effects of Superstorm Sandy in 2012.

Research by catastrophe modeling firm AIR Worldwide shows thecity—and its insurers—have a lot at risk. The insured value ofproperties in New York's coastal areas total $2.9 trillion, makingup almost two-thirds of the state's total insured propertyexposure.

The Bloomberg plan calls for the installation of new walls andtidal barriers created by dunes and saltwater flora, as well asallocating $1.2 billion in loans and grants to help building ownersretrofit property against new building codes for flood and stormsurge resiliency.

The proposal even suggests a new "Seaport City" neighborhoodbuilt on landfill along the Lower East Side of Manhattan to protectthe island from stormy seas. 

"After a catastrophe event, it's not unusual for a city to askwhat they can do to never go through those losses again," saysJulie Rochman, CEO of the Institute for Business and Home Safety(IBHS), which participated in the government's task force on theplan in January 2013. "Feasibility, however, is a matter ofpolitical will."

Rochman says she has seen cities take steps to mitigate againstnatural disasters but "nothing this ambitious in terms of taking awhole-footprint look at an entire urban area, especially on theEast Coast."

"The challenge in New York is in mitigating losses for currentresidential and property in the state," adds Rochman.

Loretta Worters vice president of the Insurance InformationInstitute, says New York might look to Florida's response toHurricane Andrew in 1992 as an example of how a disaster served asa wake-up call to the government to implement a wide-scale urbanrisk management plan.

"Hurricane Andrew changed everything: from how homes aredesigned to how meteorologists track hurricanes and how thegovernment manages emergencies. The changes over the past 20 yearsin Florida have been enormous," she says.

Recommendations from a state-wide study in Florida includedbuilding-code adjustments and tougher inspections to prevent shoddyconstruction. 

Currently, no homes in New York City are considered "low risk" in hurricaneconditions. New York is the sixth-highest state at risk of stormsurge in the U.S., with about 270,458 potential properties exposedto as much as $135 million in damages from storms.

The report published by the New York City Special Initiative forBuilding and Resiliency predicts that by the middle of the century,8 percent of New York's coastline will experience regular tidalflooding; the city will have a four- to five-degree averagetemperature increase; sea levels  can rise up to two feet;and precipitation can spike from 5 percent to-10 percent.

Bloomberg's plan would be brought to life with money allocatedfor capital improvements in New York as well as funds approved bythe U.S. Congress towards post-Sandy relief.

Says Rochman, "The conversations we had with [the task force]were interesting because they were in a hurry to get the report outin time to help those who are still busy rebuilding from Sandy, butthey do call for more analysis going forward, especially withwind-related design."

The city has suffered terrible damage from hurricanes in thedays when it was much less populated: the Great New EnglandHurricane of 1938, a Category 3 storm, caused 600 deaths and morethan $400 million in damages along the Long Island, New York andConnecticut coastlines (Sandy was a post-tropical cyclone atlandfall).

"An analysis by Karen Clark and Company estimates that [asimilar storm] would have caused $35 billion in insurance damageshad it occurred under present conditions," says Worters. "So it maybe an accurate statement by Bloomberg that it is likely aSandy-sized storm in 2050 would be more destructive, the reasonbeing that more people are building in high risk areas of thecountry."