Are we going to keep talking about climate and insurance or do something productive about it?

The scale of tragedy Hurricane Helene has inflicted across the Southeast has been devastating. Although Helene won’t have the same dramatic impacts on homeowners insurance markets in the same way as Ida and Ian, that’s not much of an assurance for two reasons. First, the market is already in such bad shape depending on where you look. Florida residents pay about $8,000 more in annual property insurance premiums than the national average. We’re feeling the insurance woes and the impacts to the housing market here in New Orleans, but the crisis is nothing compared to what’s been happening in Terrebonne Parish. After many small insurers went insolvent after Ida, many residents can only get insurance through the state insurer of last resort, with policies for some households nearing $20,00 annually. The Parish has lost nearly 6% of its population over the past three years, and all signs seem to indicate that trend will continue.

Second, Helene presents uniquely difficult challenges from an insurance standpoint. Most of the damage across Georgia and the Carolinas was a result of flooding and mudslides caused by floods – damages that homeowners policies do not cover. It’s estimated that only 2% of the homes outside of Florida that flooded during Helene’s damage had flood insurance policies. Though FEMA recently updated its disaster assistance rules, which increased the amount of aid available to survivors, it comes nowhere close to addressing the widespread damage, leaving no clear path forward. And, as an aside, Congressional leaders are in no hurry to provide disaster funding through FEMA for Helene victims.

It's another reminder that insurance is not going to save us from climate change. That’s not to say it isn’t an extremely important tool. But due to affordability issues and the simple fact that communities are often unaware of the array of risks they face in a rapidly changing climate, there will always be under- or un-insured homes that will suffer new kinds of damage, and there will always barriers even for those who do have insurance. Once again, this requires holistic, long-term solutions. A Florida representative recently introduced a bill that would create a national catastrophe reinsurance fund. Critics frame it as a bill to make other states pay for Florida’s insurance crisis. Which has some truth to it, and this particular proposal might not be the best structure for such a program, but framing it as making other states pay overlooks the fact that communities across the U.S. are going through this regularly, just at a more localized scale. Yes, there are states (like the one Tulane is in) that have an outsized share of hurricane risk. But there’s no state that’s immune to severe storms, floods, and wildfires. A federally backed (and well-thought out) natural disaster reinsurance program would actually be incredibly useful for all those places hit by Helene that did not have the proper type of insurance. Not to mention those hit by the next disaster around the bend. ?

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