Hurricanes Helene and Milton wreaked extensive havoc, and while damage assessments continue to unfold, experts from both government and private sectors predict that these storms are on track to join the notorious ranks of Katrina, Sandy, and Harvey as disasters with costs exceeding $50 billion.
One of the most distressing aspects of these hurricanes is that the vast majority of the damage—over 95% in the case of Helene—was uninsured, exacerbating the financial burden on affected individuals.
While the number of storm-related fatalities has generally declined over recent years, Helene stands out as a troubling exception. Damages from severe storms, even when adjusted for inflation, have surged significantly. Experts attribute this increase to a variety of factors, including continued development in vulnerable areas, soaring rebuilding costs outpacing inflation, and the intensification of storms linked to human-induced climate change. “The nature of today’s storms is vastly different from what we have experienced in the past,” remarked John Dickson, president of Aon Edge Insurance Agency, a firm specializing in flood coverage. “The energy these systems can retain is far greater than it used to be, and as a society, we are often scrambling to keep up with the rapidly changing weather patterns.”
The National Oceanic and Atmospheric Administration reported that, when adjusted for inflation, there have been 396 weather-related disasters inflicting at least $1 billion in damages over the past 45 years. Of those, 63 were hurricanes or tropical storms.
Achieving the $50 billion damage threshold signifies a “truly historic event,” according to economist and meteorologist Adam Smith, who oversees assessments at NOAA’s National Center for Environmental Information. He believes both Milton and Helene could plausibly reach this costly benchmark.
The first hurricane to surpass the $50 billion threshold was Andrew in 1992, followed by an extended period before Katrina, which later shattered damage records, followed by Sandy. If Helene and Milton do reach this financial mark, they would represent the seventh and eighth hurricanes to do so within seven years.
Assessing damages from these complex storms is inherently challenging, especially with those like Milton and Helene causing varied and widespread destruction. Damage from wind and flooding often occurs in different locations, complicating precise loss estimations. Estimates provided by various private firms for these storms remain incomplete, and the damaging effects can span diverse regions.
Damage assessment typically falls into three categories: insured damage, uninsured damage, and total economic cost. Most insurance firms focus solely on estimating insured losses. While home insurance generally covers wind damage, it typically excludes flooding, requiring a separate policy. The extent of flood insurance coverage varies by region and storm characteristics. Helene primarily inflicted water damage, while Milton significantly caused wind damage.
Swiss Re analyzed the ten costliest hurricanes, excluding Helene and Milton, finding that insured losses amounted to approximately 44% of the total costs. Conversely, Aon’s Dickson approximates that only about 5% of Helene’s victims had suitable insurance coverage for the damages they experienced, estimating insured losses at about $10 billion. This suggests total damage could range dramatically between $100 billion and $200 billion, though he acknowledges that figure is somewhat optimistic. For Milton, he anticipates insured losses could be between $50 billion and $60 billion.
In areas hit hard by Helene, statistics show less than 2% of households in Georgia possess federal flood insurance, while North and South Carolina have coverage rates of 3% and 9%, respectively. Specifically, in Buncombe County, North Carolina, where more than 57 fatalities occurred due to flooding, less than 1% of homes are protected by federal flood insurance.
Moody’s financial services group estimated that the combined economic toll from both storms might reach between $20 billion and $34 billion. Meanwhile, Karen Clark and Company, a disaster modeling firm, has indicated that insured losses could be around $36 billion for Milton and $6.4 billion for Helene.
“The economic repercussions are escalating because we are increasingly placing infrastructure and residences in at-risk regions,” stated Susan Cutter, co-director of the University of South Carolina’s Hazards Vulnerability and Resilience Institute. She emphasized that climate change contributes to this risk, while also noting a decline in human casualties due to improved disaster preparedness.
Flooding has been a predominant factor in this damage. Research confirms that hurricanes are becoming more intense and wetter, largely due to the accumulation of heat-trapping emissions from fossil fuel combustion. Basic physics illustrates that clouds can hold 4% more moisture for every 1°F increase (7% for every 1°C), resulting in increased rainfall.
“The consensus among scientists indicates that flooding associated with hurricanes is not only more frequent, but also increasingly severe,” noted Karen Clark. “This highlights a societal and political challenge rather than merely an insurance dilemma. We must reconsider our development strategies and evaluate the viability of continuing to build and inhabit dangerous territories, a notion referred to as ‘managed retreat.’”
Cutter further questioned the sustainability of continually rebuilding in high-risk zones, asking at what point individuals might decide enough is enough. Additionally, many homeowners in flood-prone areas find flood insurance unaffordable and forgo coverage. Thus, when disasters strike, the financial implications extend to taxpayers, as federal funds invariably flow into these areas to support recovery efforts. This effectively leads to taxpayers subsidizing living in hazardous locations.