US population growth in hurricane-prone states, as well as the increasingly heavy rainfall that accompanies these storms, has generated costlier insurance claim payouts for wind and flood-caused property damage, according to a new brief issued by the Insurance Information Institute (Triple-I)
New research from Triple-I’s latest Issues Brief shows that the greatest dollar growth in the value of NFIP claim payouts over the past 20 years occurred in the following areas of the US: Texas coast and inland Louisiana, Coastal northern Florida, Georgia, and the Carolinas, and Inland northern New York, Vermont, and New Hampshire.
At the same time, Triple-I argues that while wind speeds and storm surge in coastal areas “grab headlines”, inland flooding also, “is on the rise,”
The brief reads: “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. Ida also caused a surprising death toll thousands of miles from where the storm first made landfall.”
Then, if we point back to last year, there was also Hurricane Ian which caused catastrophic flooding in central Florida after making landfall in southwest Florida as a Category 4 major hurricane.
By the end of March 2023, National Flood Insurance Program (NFIP) claims paid after Hurricane Ian had surpassed $3.4 billion, with more than 46,000 NFIP flood insurance claims received.
Triple-I also highlights how insured losses from hurricanes have increased over just the past 15 years. When adjusted for inflation, nine of the 10 costliest hurricanes in US history have struck since 2005.
The company suggested that this is due mainly to the fact that more people have been moving into harm’s way since the 1940s, and Census Bureau data shows that homes being built are bigger and more expensive than before. As a result, 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.
Key figures to note from the Census Bureau are that the most significant population growth in the US between 2011 and 2020 came in the following five states, in order: Bureau: Texas (15.6%), Florida (13.5%), South Carolina (11.3%), North Carolina (10.3%), and Georgia (9.5%).
Moreover, property damage caused by windstorms is covered under standard homeowners and condo owner’s insurance policies, while renters insurance policies protect personal belongings against damage from windstorms. In the aftermath of hurricanes, US homeowners, renters, auto, and business insurers cumulatively receive tens of thousands of claims.
Property damage resulting from a flood is covered under a flood insurance policy, which is typically separate from either a homeowners, condo owners, or a renters insurance policy. Flood policies are underwritten through FEMA’s National Flood Insurance Program (NFIP) and private insurers.
Elsewhere, continued coastal construction – combined with rising property values and replacement costs driven higher by factors such as the COVID-19 pandemic and Russia’s invasion of Ukraine – have contributed to higher loss exposure.
Lastly, global insurance broker Aon, in research conducted with Columbia University, has estimated that, under selected scenarios, US hurricane losses could potentially wind up increasing by at least 10% over 20 years as a result of changes in climatic activity.
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