Insurers Are Struggling to Keep Up With Disasters Like Helene and Milton
Oct 14, 2024
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Leslie Kaufman, a Bloomberg Green reporter specializing in climate and insurance, discusses the catastrophic aftermath of Hurricanes Helene and Milton. She highlights the staggering financial toll of over $100 billion on recovery efforts and critiques the inadequacy of FEMA's flood support. The conversation reveals the insurance industry's struggle with rising storm risks and emphasizes the urgent need for updated flood risk assessments. Kaufman urges homeowners to stay informed and prepared in this era of increasing natural disasters.
The increasing frequency and severity of hurricanes like Helene and Milton highlight the urgent need for updated flood risk assessments and insurance policies.
Homeowners are inadequately protected due to declining insurance coverage and outdated FEMA maps, emphasizing the importance of risk awareness and proactive insurance management.
Deep dives
The Impact of Recent Hurricanes
Hurricane Helene and Hurricane Milton recently devastated the southeastern United States, causing catastrophic flooding and widespread destruction. Helene resulted in severe flooding in North Carolina, with historical levels not seen in a century and estimated damages surpassing $100 billion. In the aftermath, loss of power and community destruction left millions affected, leading to a reported over 200 fatalities. While Milton brought powerful winds and flooding to areas like Florida, only a few deaths were recorded, indicating a slight easing compared to Helene, yet the recovery challenges remain significant.
Challenges in Insurance Coverage
The financial burden of recovering from these storms has been especially taxing on the insurance industry, which faces a crisis as the costs of disasters rise. Despite increasing damage from catastrophic events, the proportion of damages covered by insurance has been declining, placing vulnerable homeowners at risk. Many affected by Helene and Milton are realizing their properties lie outside FEMA-designated flood zones, leaving them inadequately insured, as only 4% of Americans possess flood insurance. Consequently, the federal support from FEMA is insufficient to meet the recovery needs, with average grants falling significantly short of home repair costs.
The Future of Flood Risk Assessment
The outdated nature of FEMA’s flood risk maps is contributing to the ongoing challenges in disaster preparedness and insurance coverage. New startups are utilizing advanced technology to accurately predict flooding, revealing that a majority of flooding from Helene occurred outside designated risk zones, which traditional maps failed to capture. The insurance industry is increasingly adopting these innovative models to assess risks, although this has also led to selective coverage practices that may exclude high-risk homes. Homeowners are encouraged to regularly review their insurance policies and consider mitigation strategies to protect themselves from future disasters as climate change continues to escalate risk factors.
In recent weeks, two monster storms have pummeled the US. Hurricanes Helene and Milton left more than 200 dead — and early estimates suggest the recovery could cost more than $100 billion. It’s a huge strain on affected homeowners and the insurance industry that’s meant to shoulder some of that burden.
On today’s Big Take podcast, Bloomberg’s Leslie Kaufman joins host David Gura to talk about the increasing severity and frequency of extreme weather events, and how the new normal is changing the calculus for insurers.