Early Lessons From Helene Show Catastrophes Are Here to Stay, Flood Insurance Vital

Hurricane Helene made landfall late Thursday, Sept. 26, in the Florida Big Bend, a sparsely-populated 150-mile coastal stretch from Apalachee Bay, south of Tallahassee, to Waccasassa Bay in the south. All told, the population of the area amounts to less than one percent of Florida’s population. But instead of attenuating after landfall, like most storms do, Helene barreled 100 miles across the panhandle and into Georgia and North Carolina, pelting the more populous Valdosta, Atlanta and Asheville.

Across the destruction path, reports are that millions are without power and 64 people are dead. In North and South Carolina, more than a million Duke Energy customers were without power Friday afternoon. Eastern Tennessee and Western North Carolina in particular are devastated. Governor Bill Lee in Tennessee, who surveyed initial damage with state and federal officials, said damage assessments will take time.

In Florida, if Helene bore to the west before making landfall, the destruction to Tallahassee (the population, including the metropolitan area, is approximately 400,000) would have been in the tens of billions of dollars. If Helene had turned east prior to landfall, it could have caused incalculable damage to Tampa, St. Petersburg and Sarasota. After all, the most destructive hurricane to touch down on Florida’s Gulf side struck the middle-sized Fort Myers (population 96,000).

We don’t yet know the extent of the damage in Georgia and the Carolinas. But early pictures and videos show “Biblical” destruction, according to reports. Some universities in western North Carolina will close for at least a week, according to local news, and as of Sunday morning, “all roads in Western N.C. should be considered closed” according to the North Carolina Department of Transportation.

Reinsurance brokers Gallagher Re and Howden Re have suggested that the worst case loss would be $10 billion or $15 billion, respectively. Gallagher has suggested that insured losses to the private market could be in the $3 billion to $6 billion range. BMS Re forecasts $4 billion to $5.5 billion. A mitigating factor could be the upgrades to building standards after Hurricane Michael in 2018 likely making some structures more capable of withstanding the powerful winds, which were up to 140 miles per hour when Helene, the Category 4 hurricane, made landfall. In Georgia, however, where Helene traveled north after passing through the panhandle, building codes are less stringent.

Another mitigating factor to keep insured losses at the lower end is that much of the damage was caused by flooding–rather than wind. Helene brought in its wake torrential rain and storm surge in many places, including North Carolina and Georgia of 10 feet. Damage from flooding and storm surge is not covered by conventional homeowners’ insurance policies, such as the HO-3. Damage from wind is covered, as is damage from wind-driven rain, but flooding and storm surge, which are likely responsible for most of the damage, are excluded.

One private flood insurance provider in North Carolina said their data showed under 3 percent of properties in the state have flood insurance. The lack of flood insurance could be, in part, because FEMA’s maps were out of date for many years (they were just updated in July 2024).

Helene underscores the importance of having flood insurance, and of flood insurance being priced correctly. The National Flood Insurance Program (NFIP) is in need of reauthorization by Congress. Senator Bill Cassidy (R-LA) said on September 25, the day before Helene, that “we must keep the National Flood insurance Program going [and] put more money into FEMA’s disaster relief fund.” Sources reveal that Cassidy’s bill will include requirements for mitigation measures, grant programs, and means-tested insurance for those below an income threshold.

The unfortunate truth is that Americans are increasingly unable to avoid these natural catastrophes. Both the frequency and severity of these weather events have increased. Americans need flood insurance and they need their homes to be more resilient.

The R Street Blog on Insurance Journal presents the work and viewpoints of the free market think tank R Street Institute in Washington, D.C. Jerry Theodorou is the director of the Finance, Insurance and Trade Policy Program.

Topics Catastrophe Flood