Hurricane Milton could end up among the top 10 most expensive storms for insurers in the last 124 years, according to Moody’s RMS Event Response.
Moody’s estimates Hurricane Milton’s total private market loss will total $26 billion, with an outer range of $22 billion to $36 billion. In its 2024 Climate and Catastrophe Insight report, published in February, data and insights company Aon ranked the world’s costliest tropical cyclones for insured losses dating from 1900 to 2023. Even Milton’s low estimate would place it in the top 10.
However, Hurricane Helene — which caused more than 200 deaths — won’t land on the list. Although Helene caused an estimated $250 billion in damages, much of those losses were uninsured.
How losses trickle down into premiums
Large storms and severe weather events drive up home insurance in certain areas of the country. Analysis finds a strong relationship between premiums and local disaster risk, and even small increases in disaster risk can lead to significant rate hikes, according to a National Bureau of Economic Research paper.
Disasters can also drive smaller insurers to insolvency. A surge of expensive claims following Hurricane Andrew — the eighth-costliest storm for insured losses — led to 10 Florida insurers and one Louisiana insurer declaring insolvency, and many others were financially impaired, according to the Insurance Information Institute.
Florida has long been the most expensive state in the country for home insurance, with an average annual premium of $11,759, according to the Insurify home insurance report. Standard home insurance policies cover wind damage, but not flood damage, requiring homeowners to purchase additional coverage to protect their assets.
Yet, while some in certain flood zones have to get flood coverage to secure a mortgage, many go without, leaving them unprotected from the effects of hurricanes and other severe weather. Most of the damage Helene caused in western North Carolina isn’t covered by flood insurance.
The national average premium for a National Flood Insurance Program (NFIP) policy is $1,290 per year, but Florida homeowners pay $1,363, according to data from the Federal Emergency Management Agency (FEMA). Rates within a state can vary widely, however. For example, homeowners in coastal Monroe County — which includes the Florida Keys — pay $4,697 for flood insurance, while those living in the inland Highlands County pay $575.
What’s next? Searching for solutions
As the affected communities begin to rebuild, leaders and stakeholders across the country debate the best ways to manage the fallout from increasingly frequent and intense climate catastrophes.
The Heritage Foundation’s Project 2025 Presidential Transition Plan calls for ending the NFIP and returning flood insurance to the private market. Representative Jared Moskowitz (D-Fla.) recently proposed legislation for a program that spreads the burden climate catastrophes have on insurance companies across unaffected states.
Multiple states are also pushing insurers to incentivize communities and individuals to build resilient properties, and some states, like Colorado, are creating state-run programs to encourage and subsidize those improvements.
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