Insurance and other Hurricane Shocks

Climate Change
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Pearl River      It’s hard to talk about the aftermath of Hurricane Helene, because every day over the last week seems to bring more news of the devastation, particularly for people who had every reason to believe the last thing they had to worry about in these inland and often hilly places was hurricane damage.  Living on the coast comes with obvious and increasing risk, but living in the Appalachian mountains of western North Carolina should have been a place where coastal people felt they could go for safety from a storm.

This was a bad one, though, and its impacts are only beginning.  The damage extends over six states and is still being calculated.  Looking just at the agricultural impact in Georgia, Hurricane Helene damaged a “third of the cotton crop and up to 30 percent of the peanut crop were wrecked. More than 220 poultry houses were demolished, and hundreds more suffered damages. At least 48,000 acres of pecans were ruined. Moody’s estimates that property damage could run between $15 billion and $26 billion.”

Once the roads are cleared, the lost are found, power is restored, and something approaching normal returns, the aftershocks in recovery and rebuilding from Helene are going to be massive.  Insurance is unlikely to cover a lot of this devastation.  Two big reasons underline this problem.  One is that insurance companies, if they offer coverage at all, have raised their prices, often astronomically, even as they have reduced their actual coverages.  In short, Helene victims could find, as the Journal reports, that

Policies in hurricane-prone areas are now more likely to have higher deductibles for wind damage, reduced payouts for older roofs, limits on interior water damage and exclusions for damage from wind-driven rain, according to insurance agents.

The second huge problem in many of these areas is that people didn’t have flood coverage.  As the Journal further reports,

Helene is the latest storm to expose the gap between flood risks and flood coverage. Fewer than one in 100 households in the worst-flooded inland counties have flood coverage, said Mark Friedlander, spokesman for the Insurance Information Institute, an industry group. Even in Florida, where more flood insurance is sold than in any other state, more than 95% of homes in Helene’s path across the Big Bend, in the northern part of the state, lack such policies.

Many will literally be “up a creek” when it comes insurance, and in the aftermath, just as has been the case in Louisiana, Florida, and California, insurance will be harder to obtain and cost more for less.

All of this means more debt.  When a hurricane or other natural disaster hits. Many postpone retirement and attempt to take on more work. Many increase debt and fall behind on that debt. People who miss debt payments continues to rise for years after a disaster and eventually doubles four years after a storm, according to the Urban Institute.

Research also indicates that besides more debt, it also means more death, as we always believed after Kartrina hit New Orleans and the Gulf Coast.  Mi companera still scours the obituary section int the local paper for ACORN members gone too early because of the dislocation and depression that comes in the wake of such disasters.

Looking at 501 storms from 1930 to 2015, researchers found that the average tropical storm resulted in 7000 to 10,000 deaths over the 15 years that followed the storm in addition to the deaths that were immediately recorded.

Climate migration is also likely to increase from the South as more people flee more powerful storms, rising coastlines, and increased flooding, including in unexpected areas.  Here the trends are contradictory.  On one hand,

America’s population has been growing in the South for decades, but has risen especially fast since the pandemic. The South gained an additional 3.9 million people between April 2020 and July 2023, according to U.S. Census Bureau data. Ten of the 15 fastest-growing cities in the U.S. are in Texas or Florida. The shift is mostly driven by domestic migration, and movers might be motivated by lower housing and living costs.

On the other hand,

First Street Foundation, a research firm that studies climate threats to housing, found that roughly 3.2 million Americans have already migrated, many over short distances, out of flood zones, such as low-lying parts of Staten Island, Miami and Galveston, Texas. Over the next 30 years, 7.5 million more are projected to leave those perennially flooded zones, according to the study.

Either way, as one storm after another establishes, there’s no way to ignore climate change, and we need to do a lot more to adapt to this changing environment.  It’s not a matter a tree hugging, but lifesaving.

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