While the full extent of the damage in the mountains of North Carolina and Tennessee remains unclear, it is clear that Hurricane Helen is one of the deadliest and most destructive storms in recent U.S. history. As of Friday, the storm had killed at least 180 people and destroyed or damaged thousands of homes and other buildings.
In a release Thursday, private forecasting firm AccuWeather estimated the economic cost of damage caused by Hurricane Helen to be between $225 billion and $250 billion. That’s more than double the amount estimated in the first few days after making landfall in Florida last week, and much more. More so than recent major hurricanes like Sandy in 2012 and Harvey in 2017. This huge figure includes the cost of rebuilding homes, businesses, roads and infrastructure in the storm’s path from Florida to Tennessee, as well as the wages and economic output lost during years of rebuilding. There is.
Another fact that makes Helen’s tragedy unprecedented is that the hundreds of billions of dollars in losses are almost never covered by insurance. Most storm damage is caused by flooding, which is covered by government-run flood insurance programs, but few residents of the southern Appalachians have flood insurance, even if the federally designated flood insurance program does not. Even if you live in a flood zone. At this time, victims of these storms in North Carolina and Tennessee have no guarantee of comprehensive public or private assistance as they try to rebuild their lives. This situation is in stark contrast to other recent deadly storms, such as Hurricane Ian in 2022. Wind damage was paid for by standard homeowners insurance, and flooding was confined to low-lying coastal areas where residents typically purchase government flood insurance.
“Many of these (mountain) communities don’t have access to anything that can help them rebuild,” said Carolyn Kowsky, a disaster insurance expert and vice president of economics and policy at the nonprofit Environmental Defense. . Fund. “It’s going to be really heartbreaking. It’s going to take a very long time for them to rebuild.”
According to catastrophe modeling firm Cullen Clark & Company, insured losses from Helen will likely be around $6.4 billion, a small amount for a direct hit from a Category 4 hurricane with winds reaching 140 miles per hour. is. This was only half of the insured losses from wildfires in California in 2018, and only 10 percent of the losses from Hurricane Ian.
Homeowner’s insurance premiums are rising almost everywhere in the U.S. as insurance companies grapple with costly disasters, rising construction costs and new development in vulnerable areas. In states like North Carolina, where the insurance commissioner just approved double-digit premium rate hikes, rates are expected to continue rising.
However, recent disasters such as the Ian fire and the California wildfires have caused many insurance companies to go bankrupt or stop selling insurance in affected states. These market collapses have forced many homeowners to go without insurance or buy their homes from state-backed “insurers of last resort.” Despite Helen’s historic damage, states like North Carolina and Tennessee will not see a similar collapse in insurance availability.
“I don’t know if it’s going to have a big impact on the insurance market,” said Karen Clark, co-founder of Karen Clark & Company and a member of the insurance industry. It’s not a loss,” he said. A pioneer in catastrophe risk modeling.
That’s for the simple reason that most private companies stopped offering flood coverage about a century ago following a series of devastating floods on the Mississippi River. So the federal government stepped in to protect many of America’s waterfront homes from flood damage. As a result, insurance companies now pay claims for wildfires in California and storms in the Midwest, but not for large-scale rainfall events like Hurricane Helen.
The federal National Flood Insurance Program is supposed to serve as a public replacement for lost private insurance, but it hasn’t. The 5 million homes participating in the program tend to be highly vulnerable to flooding, causing repeated losses and pushing the program into billions of dollars in debt. The Federal Emergency Management Agency (FEMA) has been trying for decades to enroll more people in the program, including those who live far from coasts, but the subsidized fee Even that is out of reach for many homeowners. As a result, participation remains limited. In Asheville, North Carolina’s hardest-hit metropolis, less than 1 percent of residents have flood insurance.
Even considering the large gaps in coverage, Helen is still likely to cause FEMA’s largest flood insurance payout in recent years, likely in the billions of dollars. However, leading global reinsurer Swiss Re, which acts as a backstop for the national plan, has confirmed that most people affected during Helen will receive nothing.
“Unfortunately, much of the damage caused by these catastrophic floods is not covered by insurance,” said Monica Ningen, head of the company’s real estate business in the United States. She added that the lack of coverage “will make the task of rebuilding affected communities even more difficult.”
Without first-line disaster insurance, most flood-damaged homeowners are left to rebuild on their own. Some victims will receive thousands of dollars in repairs from FEMA, while others may be able to secure low-interest rebuilding loans from the Small Business Administration. The Department of Housing and Urban Development also has a track record of spending billions of dollars on long-term recovery needs after major disasters, paying for housing repairs and new housing development.
But this aid money could take months or years to reach hard-hit areas and is far from covering the costs of rebuilding for most people, especially those in low-income households, Kowsky said. said.
“These programs are intentionally designed not to replace insurance,” Kowsky said. “It’s really limited.”
Despite the tremendous media attention generated by Hurricane Helen and the historic scale of uninsured losses, Kowsky urges more people to purchase flood insurance or reduce their exposure to disasters. He said he was pessimistic that the hurricanes would lead to major changes in U.S. disaster policy by increasing aid. victims.
“There have been so many incidents that seem to have garnered attention and caused alarm, but each time our response has been inadequate,” she said.
Editor’s note: The Environmental Defense Fund is a Grist advertiser. Advertisers have no role in Grist’s editorial decisions.
