Insured losses from hurricanes have risen steadily over just the past 15 years, with nine of the 10 costliest hurricanes in U.S. history occurring since 2005, according to the Insurance Information Institute (Triple-I).

U.S. population growth in hurricane-prone states, coupled with the increasingly heavy rainfall accompanying these storms, has generated costlier insurance claim payouts for wind and flood-caused property damage, said Triple-I’s Issues Brief, titled Hurricanes: State of the Risk.

“Continued coastal construction — combined with rising property values and replacement costs driven higher by the COVID-19 pandemic and Russia’s invasion of Ukraine — have contributed to higher loss exposure,” the report said.

The report explained that hurricanes may not be more frequent or significantly more intense, but they do appear to be getting wetter. “While wind speeds and storm surge in coastal areas grab headlines, inland flooding is on the rise…which tracks changes in National Flood Insurance Program (NFIP) claims over the past two decades.”

Triple-I found the greatest dollar growth in the value of claim payouts from the NFIP over the past 20 years occurred in the following areas of the U.S.:

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

The most significant population growth in the U.S. between 2011 and 2020 came in the following five states, in order, according to the Census Bureau: Texas (15.6 percent), Florida (13.5 percent), South Carolina (11.3 percent), North Carolina (10.3 percent) and Georgia (9.5 percent), the report said.

Inland Flooding

“While wind speeds and storm surge in coastal areas grab headlines, inland flooding is on the rise,” the Issues Brief said, citing as examples Hurricane Ida in August 2021 and Hurricane Ian in September 2022.

Ida brought strong winds and heavy flooding to the Louisiana coast before it moved to the Northeast, where Philadelphia and New York City subway stations were flooded days after the storm passed, the issues brief said. “Ida also caused a surprising death toll thousands of miles from where the storm first made landfall.”

Last year’s Hurricane Ian caused catastrophic flooding in central Florida after making landfall in southwest Florida as a Category 4 major hurricane, the report stated.

Costly Construction

The increasing costs of hurricanes is due mainly to the fact that more people have been moving into harm’s way since the 1940s, the Issues Brief said, noting that census data show that homes being built are bigger and are more expensive.

“With bigger homes filled with more valuables and replacement costs on the rise, the data suggests demographic changes play a greater role in catastrophe-related claims and losses than weather and climate do,” it continued.

But climate also is playing a role in elevated losses, the report indicated. Insurance broker Aon, in research conducted with Columbia University, has estimated that, under selected scenarios, U.S. hurricane losses could increase by at least 10 percent over 20 years as a result of changes in climatic activity, the report said.

“This estimate does not account for increases in exposures as a result of non-climatic factors, such as new development and inflationary momentum,” said the report, quoting Aon. “These findings are based on evolving climate research and could be subject to revision as we gain new insights.”

Source: Insurance Information Institute