Early lessons from Helene show that catastrophes are here to stay, flood insurance is vital

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

In the wake of the destruction, reports say 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. Gov. Bill Lee of Tennessee, who reviewed the initial damage with state and federal officials, said damage assessments would take time.

In Florida, if Helene had gone west before making landfall, the damage in Tallahassee (population, including the metro area, is about 400,000) would have been in the tens of billions of dollars. Had Helene turned east before landfall, it could have caused untold damage in Tampa, St. Petersburg and Sarasota. After all, the most destructive hurricane to land on Florida’s Gulf Coast hit mid-sized Fort Myers (population 96,000).

We still don’t know the extent of the damage in Georgia and the Carolinas. But early images 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 reports, and as of Sunday morning, “all roads in Western NC should be considered closed,” according to the North Carolina Department of Transportation.

Reinsurance brokers Gallagher Re and Howden Re suggested worst-case losses would be $10 billion and $15 billion, respectively. Gallagher suggested that insured losses in the private market could be between $3 billion and $6 billion. BMS Re estimates $4 billion to $5.5 billion. One mitigating factor could be updates to building standards after Hurricane Michael in 2018, which made some structures better able to withstand strong winds, which were up to 140 miles per hour when Hurricane Helene 4, landed.. In Georgia, however, where Helene traveled north after passing through the panhandle, building codes are less stringent.

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

A private provider of flood insurance in North Carolina said their data shows that less than 3 percent of properties in the state have flood insurance. The lack of flood insurance could be, in part, because the FEMA maps are many years out of date (they were just updated in July 2024).

Helene stresses the importance of flood insurance and getting the price right. The National Flood Insurance Program (NFIP) needs reauthorization by Congress. Sen. Bill Cassidy (R-LA) said on Sept. 25, the day before Helene, that “we need to keep the national flood insurance program (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 disasters. 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 views of the free-market think tank R Street Institute in Washington, DC Jerry Theodorou is director of the Finance, Insurance and Trade Policy Program.

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