The hurricane’s massive size and record-breaking storm surge left an equally massive footprint of destruction across the Southeast, from Florida’s Tampa Bay region to Georgia, Tennessee and the Carolinas. The storm likely caused $15 billion to $26 billion in property damage, as well as an additional $5 billion to $8 billion in lost economic output, Moody’s Analytics said. Although it is too early to know the full extent of the damage, experts said the storm could have major consequences for homeowners, the private insurance industry and the federal flood insurance program.
“In Florida, we have seen so many companies go belly up because of disasters,” said Amy Bach, executive director of United Policyholders, a consumer advocacy group. As some companies have abandoned the market, new ones have moved in. But Bach said these new players have less experience paying claims and less capital to draw from than the big national carriers. A wave of new insurance claims could send them into bankruptcy.
“None of this is good for anyone: victims, municipalities, FEMA, the market. It’s a huge mess for everyone,” Bach said.
Florida’s insurance market had already been in crisis long before the storm, with many residents still waiting to settle their claims from Hurricane Ian, which struck in 2022. Before Helene hit, some insurance companies had already begun to doubt they could weather Florida’s repeated superstorms. Others had stopped selling new policies in high-risk coastal areas.
These shifts in the industry’s risk tolerance were happening across the country as climate change fueled increasingly severe disasters. But this summer, Moody’s said things appeared to be turning around. The property insurance market was stabilizing, as companies raised rates and reduced coverage. “Companies generally have solid balance sheets,” the agency said in June.
The ratings agency offered a grimmer outlook after Helene, warning of spiking premiums in Florida and more property owners either forgoing coverage or leaving the state.
The cost of property insurance in Florida is already among the highest in the country. Three straight years of hurricanes striking Florida’s Gulf Coast “reinforces growing concerns,” said Adam Kamins, Moody Analytics’ senior director of economic research. “Although climate hazards alone tend not to compel residents to move out of an area, further increases in insurance premiums might,” he said.
In the end, private insurers will likely be spared the worst losses from Helene because standard homeowners and renters insurance doesn’t cover flooding, leaving residents who don’t have flood insurance with staggering rebuilding costs. The government-run National Flood Insurance Program is the main source of flood insurance in the United States and millions of households in risky areas rely on it. But as disasters worsen, the program is facing increasing financial strain and many homeowners in flood-prone areas don’t buy protection.
Mark Friedlander, a spokesman for the Insurance Information Institute, an insurance industry trade group, said few homeowners in places like Atlanta and Asheville that sustained catastrophic flooding from Helene carry flood insurance. And in Florida’s Big Bend, many of the storm victims do not even have home insurance, he said.
As Hurricane Helene barreled through Florida, the storm’s winds and flooding left a trail of damaged homes in its wake, causing up to an estimated $6 billion in private insurance losses, according to global reinsurance broker Gallagher Re.
As homeowners assess the damage, the storm is again drawing attention to wobbly Florida’s property insurance market. Soaring premiums have squeezed homeowners, who shouldered a 45% increase in insurance rates from 2017 to 2022, according to a recent report from the Florida Policy Project.
The average annual premium for a Florida homeowner is $5,500 — about 140% higher than the average U.S. homeowner’s insurance premium of $2,285, according to Bankrate. The spike in costs sometimes leads people to forego insurance altogether, with some Florida residents tellingCBS Miami that they’ve been socked with rates reaching $20,000 per year.
With extreme weather becoming more frequent and destructive due to climate change, homeowners in parts of the U.S. facing mounting risks are likely to see significantly higher insurance costs in the years ahead, according to a June paper from experts at the University of Wisconsin and University of Pennsylvania.
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Although that could help stave off rate increases in the short term, over the longer term Florida homeowners and insurers might be powerless as the planet continues to warm.
“As losses from climate change worsen, the financial stability risks of insurers is likely to become even more pronounced,” noted the researchers from Harvard, Columbia and the Fed. “We are likely to see policymakers face difficult tradeoffs in maintaining affordability, availability and reliability of insurance markets.”
The average premium jumped 33 percent between 2020 and 2023, far more than the rate of inflation, the data show. But in some places, homeowners are paying more than twice as much for insurance, as a share of home value, than people who live elsewhere and face similar exposure to severe weather.
The average premium jumped 33 percent between 2020 and 2023, far more than the rate of inflation, the data show. But in some places, homeowners are paying more than twice as much for insurance, as a share of home value, than people who live elsewhere and face similar exposure to severe weather.
In communities where insurance rates exceed the actual risk, homeownership can be unaffordable. And in places where insurance prices are too low, it encourages people to move into homes in areas likely to be hit by wildfires or other disasters that could deliver financial ruin, Dr. Sen said.
The market is “incentivizing all sorts of crazy behavior,” she said.
Might be a watershed event where the general public realizes much of the south is now unaffordable for most to live in.