Hurricane Helene has caused extensive damage throughout the Southeast, from Florida to the Carolinas. Estimated property damage ranges from $15 billion to $26 billion, with an additional loss of economic output of $5 billion to $8 billion.
What happened: Hurricane Helene has left a swath of destruction in its wake, further underscoring the precarious nature of Florida's property insurance market. Insurance premiums have seen a staggering 45% increase between 2017 and 2022, according to a recent study. report from the Florida Politics Project.
Governor of Florida Ron De Santis (R) has declared a state of emergency in 41 counties and ordered evacuations in some coastal communities. He also urged residents to prepare for the hurricane, prompting many to board up their windows, sandbag their homes and fill up their cars with gas.
The average annual premium for a homeowner in Florida is now $5,500, a figure that is about 140% higher than the average U.S. homeowner's insurance premium of $2,285, according to Bankrate. These rising costs have led some residents to forgo insurance altogether, with some reporting rates of up to $20,000 per year.
Even before Hurricane Helene, Florida's insurance market was in crisis, with companies questioning its ability to withstand the state's frequent superstorms. Moody's has expressed concern about rising premiums and an increasing number of homeowners dropping coverage or leaving the state.
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Standard homeowners and renters insurance policies do not cover flooding, leaving those without flood insurance to shoulder high rebuilding costs. The government-run National Flood Insurance Program, the primary source of flood insurance in the United States, is also under increasing financial strain as disasters intensify.
According to a report by CBS News, traditional insurers have reduced their home policy offerings in Florida, especially in disaster-prone regions, leaving Citizens Property Insurance Corp. and newer insurers to fill the void. These insurers, however, are dealing with higher rates from reinsurance companies, which provide insurance to insurers.
Jeff Brandesfounder and president of the Florida Policy Project, told the outlet: “Florida, much more than any other state in the country, is exposed to the global reinsurance market.”
Recent reforms to Florida's insurance market may offer some relief to homeowners. Gov. Ron DeSantis signed a property insurance bill in 2022 aimed at deterring frivolous lawsuits and limiting insurers' costs.
Florida's home insurance crisis has intensified over the past year, with insurance premiums reaching the highest in the country.
The crisis has hit South Florida especially hard, where homeowners paid more than $10,000 in an average annual premium in 2023.
The arrival of Hurricane Helene threatens to exacerbate this crisis, which could lead to higher insurance premiums and financial instability for smaller insurance companies.
Why is it important: Rising insurance costs in Florida underscore the broader issue of climate change and its impact on insurance markets. As extreme weather events become more frequent, homeowners in high-risk areas are likely to face increasing insurance premiums.
The situation in Florida serves as a stark reminder of the potential financial implications of climate change, with the state's property insurance market being particularly vulnerable due to its exposure to the global reinsurance market.
Recent reforms may provide some relief, but the long-term outlook remains uncertain.
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