Hurricane Helene might have spared Key Biscayne and the Miami area, but will residents see an increase in their insurance rates next year?
“It is too early to calculate with precision the total economic losses from Hurricane Helene, but it will surely be in the tens of billions throughout all of the affected states, with some estimates above the $100 billion mark,” said Alejandro Perez-Duque, CEO of the Key Biscayne-based PVG Insurance Group.
Destruction from Hurricane Helene is expected to cost insurers roughly $6.4 billion, according to an estimate this past week from catastrophe modeling firm Karen Clark & Company. In late September, Clark already had estimated $40 billion in insured losses had taken place in the U.S. this year from “convective storm activity,” some of that, of course, attributed to Hurricane Debby in August.
Steve Bowen, chief science officer at reinsurance company Gallagher Re, told Axios that it is unlikely that Helene’s impact would result in the same insurance market turmoil as Hurricane Ian in 2022, when a reported $21 billion in insured losses took place, much of it in the Fort Myers area. Helene decimated a rural and far less populated area this time in the Big Bend.
“Based on the landfall of Helene occurring in a sparse area of Florida’s Big Bend, we expect this will be a very manageable event for Florida residential insurers,” said Mark Friedlander, spokesman for the Insurance Information Institute.
What Hurricane Ian did two years ago was force insurers to close their Florida operations or declare themselves insolvent. And, it increased the coverage lineup for Citizens Property Insurance Corp., the state’s insurer of last resort, which has had to sharply increase its rates and release many of its policies to new, incoming insurers to the state.
CoreLogic, which provides data and analytics for a number of industries, estimates insured losses in Florida and Georgia from Helene between $3 billion and $5 billion, not counting losses to the National Flood Insurance Program, which does not affect the private market.
Moody’s Analytics estimate of Helene’s total losses is between $20 billion and $34 billion, with property damages ranging from $15 billion to $26 billion. Officials with Moody’s said it was too early to project insured losses.
AccuWeather estimated the overall economic loss to come in at $145 billion to $160 billion.
“Insured losses will be much lower than economic losses due to limitations of flood insurance for those who had it,” Perez-Duque said. “While a lot of claims have already been filed (over 60,000 insurance claims in Florida alone as of Oct. 1), it will be key to determine for those claims if the proximate cause of loss was wind (which peaked at 140 mph) or flood (with some properties submerged in feet of water).”
As far as insurance rates, some policyholders in Florida were just starting to see a soft reduction in their renewal rates. That could be reversed the next time around, although there’s a larger share of insurers in Florida now.
Damages outside of Florida often have some type of impact on reinsurance companies that manage insurers in this state.
“For property and auto carriers paying billions in claims, this will be a before and after event which will affect rates and capacity,” Perez-Duque said. “This review takes time to cycle through, but it doesn’t help in an insurance market that was transitioning from hard to stable after the wrath of Hurricane Ian and other factors pushing reinsurance for catastrophe coverage to all-time highs.”
Perez-Duque said that many residents in other states, far from the coastlines, lack federal flood insurance and would not be covered by such a disaster.
“The storm dumped in rain the equivalent of the entire water basin of Lake Tahoe in an area that was not prepared at all for this, and where flood insurance is not as commonplace to have in the non-coastal areas of Georgia, South Carolina and North Carolina,” he said.
In fact, CNBC estimated this week that just 1% of homes damaged by Hurricane Helene had flood insurance.
“The losses are tremendous and of all sorts, from loss of life to property and auto total losses, business interruption, overflow of sewage and chemicals, power grid failure, drowned chicken flocks, quartz mining for computer chips, and damage to crops, such as cotton fields (estimates of close to 6% of annual cotton production was lost),” Perez-Duque said. “This storm was remarkable in its extent and variety of damage.”
Hurricane Helene has killed more than 160 people, and many are currently classified as missing.
Want to help Helene’s victims?
One of Perez-Duque’s friends is Lyle Chariff, who has organized a GoFundMe page for families in Hendersonville and Asheville in the hard-hit areas of North Carolina.
“As a firm, and personally, we are supporting relief efforts,” Perez-Duque said.
Here is the link to donate.
