What's behind the surge in hurricane payouts?

New report highlights impact of 'costlier and wetter' hurricanes

What's behind the surge in hurricane payouts?

Insurance News

By Mika Pangilinan

Population growth in hurricane-prone states, coupled with increasingly heavy rainfall associated with these storms, has led to costlier insurance claim payouts for property damage caused by wind and flood, according to Insurance Information Institute (Triple-I).

In a newly published issues brief, Triple-I identified the three areas where National Flood Insurance Program (NFIP) claim payouts saw the greatest dollar growth over the past two decades:

  • Texas coast and inland Louisiana
  • Coastal northern Florida, Georgia, and the Carolinas
  • Inland northern New York, Vermont, and New Hampshire

Considering this list, Triple-I highlighted the rise of in-inland flooding as a significant concern, pointing to the impact of Hurricanes Ida in 2021.

“In August 2021, Hurricane Ida brought strong winds and heavy flooding to the Louisiana coast before delivering so much water to the Northeast that Philadelphia and New York City saw flooded subway stations days after the storm passed,” the brief stated. “Ida also caused a surprising death toll thousands of miles from where the storm first made landfall.”

Hurricane Ian similarly caused catastrophic flooding in central Florida after making landfall in southwest Florida as a Category 4 major hurricane, Triple-I added.

Triple-I further indicated that nine of the ten costliest hurricanes in US history have occurred since 2005.

It attributed this increase in costs to more people moving into high-risk areas since the 1940s, in addition to the fact that homes being built are larger and more expensive than in the past.

Citing data from the Census Bureau, Triple-I's issues brief enumerated the five states which have witnessed the most significant population growth from 2011 to 2020:

  • Texas (15.6%)
  • Florida (13.5%)
  • South Carolina (11.3%)
  • North Carolina (10.3%)
  • Georgia (9.5%)

Last month, Triple-I published survey findings indicating that US homeowners are unprepared for the hurricane season.

The survey conducted in collaboration with Munich Re USA found that 60% of homeowners have not taken any steps to better protect their homes against hurricanes. Furthermore, only 40% said they have implemented some preventive measures and less than half (48%) have an evacuation plan in place.

The same survey revealed a trend of population migration to southern states exposed to coastal weather events, with these places welcoming new residents who may not be aware that they live in storm surge danger zones.

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