While the Carolinas are still recovering from the effects of Hurricane Florence, several risk modeling firms have estimated insured losses in the billions.
Insured losses caused by Hurricane Florence could reach $2.5 billion or more according to preliminary estimates from several risk modeling firms. And those projections may rise as the region continues to deal with ongoing flooding.
Karen Clark & Co. calculated Hurricane Florence caused $2.5 billion in insured losses due to wind, storm surge, and inland floods. That estimate does not include any losses covered under the National Flood Insurance Program (NFIP).
RMS, a global risk modeling firm, pegged insured losses at $2.8 billion to $5 billion. The firm attributed $1.3 billion to $2.6 billion of those losses to wind destruction, while storm surge and flooding in inland areas led to between $700 million and $1.2 billion in insured losses.
The NFIP, RMS estimates, stands to take a hit of between $800 million and $1.2 billion. Unfortunately, many properties in North and South Carolina did not carry flood insurance, which leaves those structures underinsured in the wake of this disaster.
Uninsured Losses from Floods
Some 445,000 residential and commercial properties are insured through the NFIP in North Carolina, South Carolina, and Virginia, according to CoreLogic. In North Carolina, roughly 134,000 homes have NFIP coverage — a sum the state’s Insurance Commissioner Mike Causey said was too low.
“I’m disappointed by the small number of flood insurance policies in force in North Carolina,” Causey said. “We certainly have much more water damage than wind damage, and unfortunately, these people that think they may have coverage when they file those homeowners claims are going to find out floods aren’t covered.” He added the NFIP has settled about 10,000 claims for a total of $10 million so far in his state.
Water from nearly 40 inches of rain swamped residential and commercial properties, pushing flood-related losses to between $19 billion and $28.5 billion, CoreLogic estimates. The firm further states about 85% of residential properties had no flood insurance. In dollar terms, that means uninsured losses from the flooding could reach $13 billion to $18.5 billion.
However, private insurers, CoreLogic notes, provide coverage to residential and commercial properties that will add up to insured losses of $4.5 billion to $7.5 billion in North Carolina and $1 billion to $2 billion in South Carolina.
How Insurers are Responding
Prior to the storm, South Carolina issued an order that permitted insurers to bring out-of-state adjusters to process claims on a temporary basis. Both North and South Carolina encouraged insurers to set up claims processing centers, and each state created websites to inform residents how to file for damages.
The top insurer in both states, State Farm, has already begun to handle claims. As of September 24, the company said approximately 15,000 homeowners insurance claims had been submitted in North Carolina for a total of $2.7 million in damages. Meanwhile, in South Carolina, the insurer reported it has reimbursed $749,000 for 1,800 hurricane-related homeowner filings.For insurance agents, the lesson from Hurricane Florence — as well as last year’s Hurricane Harvey — is that flooding poses risks to properties everywhere, both inside flood zones and outside. Therefore, it’s smart to remind clients that protecting their properties against flood damage is a vital part of any insurance strategy.