Hurricane Season Predictions Put Spotlight on Insurance Costs

Hurricane Season Predictions Put Spotlight on Insurance Costs
Hurricane Florence gains strength in the Atlantic Ocean as it moves west, as viewed from the International Space Station, on Sept. 10, 2018. (NASA via Getty Images)
Mark Gilman
6/11/2024
Updated:
6/11/2024
0:00
The coastal regions of the United States are hoping that hurricanes this year will dodge landfall, not just to save lives and property but also to spare several states from running out of insurance options. However, according to predictions from the National Oceanic and Atmospheric Administration (NOAA), those hopes may be dashed. 
NOAA is projecting an 85 percent probability of an above-average hurricane season this year—June 1 through Nov. 30—with damage exceeding a reasonably mild season in 2023. In addition, more than 32.7 million residential properties in the U.S. Gulf and East coasts could be subjected to moderate or severe damage from hurricane-level winds and storm surge flooding, California-based real estate information service CoreLogic estimates.
While residents of states such as Florida and Louisiana have become used to hurricane-level home destruction, a significant issue for both is that many insurance companies in those states have decided to throw in the towel and leave.
“The appearance of a hurricane here is routine,” Dan Burkhardt, owner of Burkhardt Insurance in New Orleans, told The Epoch Times. “You get the boards for the windows because the first breech is a branch coming through your window. But how do 11 insurance companies in Louisiana go bankrupt? Why were they selling home insurance to begin with?
“We basically have six left, including Lloyds and several GAs [general insurance agents]. [The State of Louisiana] just changed one of the rules here that said if an insurance company had you for three years, they can’t cancel on you. Well, that rule just got ousted because we were the only ones who had it and it scared off insurance companies from coming here.”   
In addition, in states such as Florida, hurricane activity has caused many top insurance carriers, such as Farmers Insurance, Bankers Insurance, and Lexington Insurance (a subsidiary of AIG), to leave the market. This year, AAA Insurance announced that it will no longer renew insurance coverage for some Florida properties. 
“Hurricanes remain one of the largest, single-insured loss drivers when they do occur,” Maiclaire Bolton Smith, CoreLogic’s vice president of hazard and risk management, said in a statement. “Changes in hurricane activity and exposure concentrations from one year to the next in risky geographies across the U.S. shift the risk profile every year, which is why it is important to consistently reevaluate.”
However, in addition to hurricane-related weather patterns, some are pointing fingers at lax building codes, which have left homes ill-prepared for high winds and storms subject to massive destruction and the subsequent need for insurance coverage. 
Researchers with the Insurance Institute for Business and Home Safety (IBHS) issued their 2024 “Rating the States Hurricane Coast” report, pinpointing some severe issues with building codes in hurricane-prone states, including Texas, Mississippi, and Alabama.
Ian Giammanco is a meteorologist with the IBHS and a co-author of the “Rating the States” study, which evaluated building code adoption, enforcement, and contractor licensing in the 18 states prone to hurricane damage from Texas to Maine. He told The Epoch Times that insurance companies leaving a market is a final symptom of a risk issue in some states and the main thing that homeowners in the path of hurricane activity need to do is upgrade their homes to withstand more wind. 
“The two best things [a homeowner] can do is get a fortified roof and a wind-rated garage door. Bar that, the biggest issue is flooding,” he said. “We can mitigate for the wind, but when you look at flooding, we are really pigeon-holed and stuck with few options. But when it comes to building codes, it’s so important that they need to be in place prior to when communities are actually developed.”  
Solutions to safeguard homes are essential for homeowners who can’t find buyers because of high interest rates as a result of their homes being located in hurricane-prone areas. According to Mr. Burkhardt, this is especially the case in states such as Louisiana. 
“I’ve got customers who, with interest rates coming down, are trying to sell their homes and move,” he said. “Buyers approach them and then they get the insurance costs and it goes over their budget. We have one of the highest rates in the country. If you have a home worth $300,000 to $400,000, you’re looking at $10,000 for insurance. If you’re willing to take a risk, we sell insurance without hurricane and wind coverage and it goes down to $1,500. Then they’re forced to ask, is it worth that risk?”
As for the predictions for a busy 2024 hurricane season, Mr. Giammanco says the number of hurricanes predicted nationally should be secondary to the chance of a single violent storm hitting your home. 
“In regards to predictions, I mostly tell folks to take them with a grain of salt, and if one makes landfall, it only takes that one to disrupt your entire life,“ he said. ”Predictions raise awareness, but the one storm that affects you is the one that matters.”
Mark Gilman is a media veteran, having written for a number of national publications and for 18 years served as radio talk show host. The Navy veteran has also been involved in handling communications for numerous political campaigns and as a spokesman for large tech and communications companies.