Between $8 billion and $14 billion with a "best" estimate of $11 billion is Moody's RMS Event Response's projection for the total U.S. private market insured losses from Hurricane Helene.
That was before Hurricane Milton, which saw a rapid intensification that was one of the "most extreme ever recorded," according to Everstream Analytics. However, it landed in Florida as a Category 3 hurricane — a serious risk but far better than the Category 4 or 5 experts expected.
By 5 a.m. Thursday, maximum sustained winds had dropped to 85 mph, making it a Category 1. However, it still means more damage to Florida and southern Georgia, although currently it's not projected to directly cross into any other U.S. state or territory. According to Reuters, the storm set off at least 19 reported tornados.
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It's not just hurricanes: tornadoes, wildfires, droughts, winter storms, flooding, earthquakes, and heatwaves. Figures that the Insurance Information Institute has compiled on U.S. natural catastrophe estimated insured losses run as follows: 2010, $13.6 billion; 2011, $35.8 billion; 2012, $57.9 billion; 2013, $12.8 billion; 2014, $15.3 billion; 2015, $16.1 billion; 2016, $23.8 billion; 2017, $78.0 billion; 2018, $52.3 billion; 2019, $25.5 billion; 2020, $74.0 billion; 2021, $92,0 billion; 2022, $98.9 billion; and 2023, $79.6 billion.
There's some variation, but the trend line is increasing. A report from insurance brokerage MarshMcLennan Agency said that commercial property insurance rates have seen year-over-year increases across 24 consecutive quarters and that rate increases averaged 11% at the end of 2023.
"High-magnitude catastrophe losses, the enduring challenges of the pandemic on the supply chain, fluctuations in the employment market, and rising inflation have banded together to create a perfect storm that threatens the sustainability of every property portfolio," they wrote.
There is more investment and capital to match bigger markets and insurers' greater willingness to underwrite risk, bringing some stabilization. However, property owners are caught as lenders and insurers face "rising demand for broad property coverage terms" and the higher costs that go with it.
Exposure increases from "secondary catastrophe perils" such as bigger storms, flooding, hail, and freezing temperatures. In the 2010s, the number of climate events causing at least $1 billion in damage averaged 13 per year. In the 2020s, that has risen to 20.
While the big primary perils have a greater impact, they are also less frequent. The secondary risks have lower costs per event but are more frequent. AM Best said that such secondary perils as wildfires, tornadoes, and severe thunderstorms are growing in the share of damage that happens. Over half of insured property losses from 2017 to 2019 were due to those secondary risks.
MarshMcLennan says owners with "significant exposures and sustained losses" can expect rates to climb by 50% to 100%. For example, the New York Times reported Yardi Matrix data that insurance is 8% of operating expenses for multifamily properties. For many owners, that means putting off renovations that would cut the cost of utilities, which would lower the cost of operation. But they can't go without insurance to do so. Where the wheel ultimately will stop spinning is hard to tell.
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