Early lessons from Hurricane Helene’s wrath

This analysis is in response to breaking news and will be updated. It was last updated at 2:30pm ET, Oct. 1. Please contact pr@rstreet.org to speak with the author.

On Sept. 26, Hurricane Helene made landfall in Florida’s Big Bend, a sparsely populated 150-mile coastal stretch from Apalachee Bay, south of Tallahassee, to Waccasassa Bay. All told, the area’s population amounts to less than 1 percent of Florida’s population. But instead of attenuating after landfall, like most storms do, the Category 4 hurricane barreled 100 miles across the panhandle and into Georgia and North Carolina, pelting the more populous cities of Valdosta, Atlanta, and Asheville.

As of Oct. 1, more than a million households and businesses are still without power and at least 128 people are dead. In North and South Carolina, more than 750,000 Duke Energy customers are still without power as of Monday afternoon. Eastern Tennessee and Western North Carolina are particularly devastated. Tennessee Gov. Bill Lee, who surveyed initial damage with state and federal officials, said it would take time to assess the damage fully. 

If Helene had borne to the west before making landfall in Florida, the destruction to Tallahassee’s metropolitan area (with a population of approximately 400,000) would have been in the tens of billions of dollars. If the storm had turned east prior to landfall, it could have caused incalculable damage to Tampa, St. Petersburg, and Sarasota. Instead, early pictures and videos out of North Carolina, Tennessee, and Georgia show “biblical” destruction. Some universities in western North Carolina will close for at least a week, and the North Carolina Department of Transportation stated on Sunday morning that “[a]ll roads in Western N.C. are considered closed.” Similarly, the Tennessee Department of Transportation warned residents that “[a]ll roads in Upper East should be considered potentially hazardous, and motorists should avoid traveling in these areas unless seeking higher ground.”

Prior to the storm making landfall, reinsurance brokers Gallagher Re and Howden Re suggested a worst-case loss of $10 billion or $15 billion, respectively. Gallagher also 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. Moody’s now estimates total property damage in the range of $15 to $26 billion dollars.

One mitigating factor keeping insured losses at the lower end is that upgrades to Florida building standards after Hurricane Michael in 2018 likely made some structures more capable of withstanding the powerful winds of up to 140 miles per hour. In Georgia, however, where the storm traveled north after passing through the panhandle, building codes are less stringent. Another mitigating factor is that much of the damage was caused by flooding rather than wind. Helene brought torrential rain and storm surge in many places, including North Carolina and Georgia. Conventional homeowners’ insurance policies like the HO-3 cover wind damage and damage from wind-driven rain; however, 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 that under 3 percent of properties in the state have flood insurance. The lack of flood insurance could be due, in part, to the fact that Federal Emergency Management Agency (FEMA) flood zone maps were out of date for many years (though they were recently updated).

The widespread damage caused by Hurricane Helene underscores the importance of having flood insurance—and of flood insurance being priced correctly. The National Flood Insurance Program requires reauthorization by Congress. On Sept. 25, the day before Helene made landfall, Sen. Bill Cassidy (R-La.) said “We must keep the National Flood Insurance Program going [and] put more money into FEMA’s disaster relief fund.” Cassidy’s bill will likely include requirements for mitigation measures, grant programs, and means-tested insurance for those below a certain income threshold.

Helene exposed several weaknesses in disaster management. First, it demonstrated that catastrophic flooding can happen virtually anywhere in the United States, even outside of flood zones. Second, homes within flood zones need to boost their resilience pre-emptively—not after disaster strikes. And third, underpriced federal flood insurance sends the wrong signals to homeowners. Insurance premiums based on risk may be unpopular, but they are less burdensome than relying on government disaster relief to recoup a mere fraction of the loss.