Hurricane Milton has left its mark on the southern states of the U.S., not only causing widespread devastation but also shaking up the insurance industry. Predictions and preliminary reports indicate significant insured losses, potentially reshaping the financial viability of many insurers. Experts across various sectors are closely monitoring the situation, as two major storms—the recent Hurricane Milton and the preceding Hurricane Helene—made landfall within such a short span, leading to overlapping claims and complications.
According to GlobalData, the aftermath of the storms has led to expectations of increased claims across general insurance lines as we move closer to 2024. An overwhelming number of claims from Hurricane Helene alone, reaching beyond 112,926 reported claims, has already dealt the insurance industry significant blows. Insured losses tied to Helene are estimated at around $1.1 billion. This staggering volume of claims is symptomatic of larger systemic issues within the insurance framework, especially concerning flood coverage.
Hurricane Milton, which recently made landfall near Siesta Key, is another storm for which the insurance sector is bracing itself. An analyst for GlobalData, Manogna Vangari, revealed the storm caused destruction valued at over $50 billion. And this may just be the tip of the iceberg, as circumstances could worsen with the total number of claims expected to rise significantly once all damages are accurately assessed.
The dual hurricane impact emphasizes serious deficiencies in this nation’s flood insurance program. Homeowners typically find themselves caught off-guard as standard homeowner policies do not cover flood risks. Instead, flood policies must be procured separately from the federal government’s National Flood Insurance Program (NFIP), which many homeowners neglect. Currently, only about 6% of U.S. homes are backed by flood insurance, leaving many at risk as climate patterns increasingly indicate severe flooding scenarios.
Seeking insight, Dr. Daniel Betten, the Director of Forensic Meteorology at CoreLogic, explained the unique challenges Hurricane Milton posed; it was not just the wind or flood, but how the storm uniquely interacted with various weather factors, leading to atypically strong wind conditions far away from the coast. The unusual wind and flood conditions throughout Florida highlight the broad geographical impact of what would traditionally be considered coastal storms.
With estimates for wind and flood losses from Milton ranging from $17 billion to $28 billion according to CoreLogic, and distinctly indicating how inland flooding is affecting traditionally uninsured properties, insurers and property owners alike are left grappling with unforeseen chaos. Major cities and coastal areas such as Sarasota and Fort Myers found themselves grappling not just with storm surge but with flooding caused by persistent rainfall, leading to widespread damage.
Industry experts feel pressed without clear guidelines on establishing which storm caused which damages—an inference increasingly complicated due to the limited timeframe between the two hurricanes. Adjusters—who must distinguish claims from Hurricane Helene and those resulting from Milton—will face hurdles and delays as they work to navigate the muddy waters of insurance claims. Amwins’ John Tolland stressed how the complexity of the situation might lead to extended timelines when estimating total damages.
What is simultaneously pressing is the long-term sustainability of the NFIP, which many homeowners rely on to cover their flood risks. Susan Flemming, Amwins' executive vice president, voiced concerns about the NFIP’s troubling financial outlook, stating the program’s funds are depleting faster than they are being replenished. With the clouds of chaos from recent storms, it’s clear Congress may be pushed to intervene sooner rather than later.
Those living near oversaturated retaining ponds and rivers might witness the greatest impact as the insurance market begins to reassess property locations as prime flood risks. The aftermath of storms Helene and Milton could influence the rates of insurance premiums significantly, especially if historical complacency around flood risk factors wanes.
To mitigate the impact of such environmental unpredictability, many homeowners are now exploring supplemental measures for protection, such as parametric insurance solutions. These are innovative products tied to specific parameters, allowing immediate insurance payouts triggers when predetermined flood levels are met. This agile payment model can assist property owners considerably compared to the traditional process of claims adjusting, which often involves delays. Tolland notes this approach complements rather than replaces existing flood insurance structures.
Florida’s insurers are currently facing the reality of overlapping claims due to the consecutive brutal storms. It is quickly becoming clear; the longer-term effects of these hurricanes, especially with the currently unpredictable nature of weather events, could inflict lasting changes on how risk is assessed and how insurance products are structured moving forward.
The broader financial impact on the insurance industry isn’t solely contained to homeowner’s insurance or general coverage. The dual hurricane hits mean various sectors—commercial, industrial, and residential—are equally susceptible to experiencing financial strain. The combined losses related to Milton and Helene could lead insurers to reevaluate risks and pricing, particularly for properties or businesses located on the fringes of flood zones.
Moving forward, as analysts indicate, insured losses from Hurricanes Helene and Milton could top well over $150 billion by 2024. Gallagher Re’s Charles Graham has alluded to the estimates for natural catastrophe losses this year, where losses related to prior events are already staggering. Insurance companies will need to gear up not only for the loss totals but also adapt their strategies to account for these rapidly changing conditions.
The conclusion of both storms acts as more than just statistical data—it gives insurers, property owners, and lawmakers alike the chance to reflect on the necessity of refining definitions of risk, accelerating the evolution of coverage models, and prompting urgent discussions within Congress. The changing climate leaves little room for complacency, and it’s clear the insurance industry must evolve alongside it to provide appropriate coverage to mitigate the ever-growing list of risks home and business owners face.
