Fueling home insurance crisis: Natural disasters rack up billions in damage

Ida. Ian. Idalia. Extreme storms are increasingly battering the U.S. at alarming rates and causing billions in damage.

“You want to live on the water, you got to put up with it, you know,” 77-year-old retiree John “Sparky” Abrandt said as he picked up debris around his Horseshoe Beach, Florida, home following Hurricane Idalia.

It’s not just on the water that homeowners are paying the price. The West is facing deadly heat waves and drought, wildfires are stretching far beyond their normal boundaries and tornadoes are leveling towns across the Midwest and South.

“Make sure that you’re assessing the risk of where you live,” Insurance Information Institute (Triple-I) spokesperson Scott Holeman said. “The ocean views are great. The mountain views are great. But if there are risks in some of those areas, know that costs are probably going only up.”

Triple-I data shows natural catastrophes in the U.S. caused $100 billion in insured property loss in 2022. These costly natural disasters are becoming way more frequent. 

Adjusted for inflation, there are more billion-dollar disaster events in the past 13 years than in the 30 years before it, according to NOAA.

“As we see conditions changing and more people living in those risky areas, there are more people exposed,” Holeman said. “You’re seeing some companies that are saying, ‘We’re not going to do any more of this kind of business in these areas.'”

The insurance pinch is squeezing out people around New Orleans, where nearly every home faces a high flood risk. According to real estate company Redfin, 15,000 more people moved out than in the past two years as insurance premiums price people out of what used to be an affordable place to live.

But migration out of New Orleans is a rare exception, as most population shifts are moving into harm’s way.

“There are people that continue to move to places where there are a lot of wildfires, or we’re certainly not seeing people really leave Florida,” Holeman said. 

A Redfin analysis shows over the past four years, people are increasingly moving into the U.S. counties with the highest flood, fire and heat risks. 

The pandemic prompted a lot of these moves to warmer areas with lower costs of living. Redfin’s chief economist says it’s human nature to focus on current benefits and discount risks that are tougher to measure, like climate. 

It explains why Phoenix, Arizona, drew in 76,000 more people in the past two years amid scorching heat and a lack of water; while Lee County, Florida, welcomed 60,000 more people, though Hurricane Ian ravaged the coast last September.

“I guess all you do is put everything back together and try again,” Fort Myers, Florida, resident Luis Damone said while trudging through knee-deep water in the aftermath of Hurricane Ian.  

This is the final installment of a three-part series on the homeowners’ insurance crisis. Catch up on part 1: Why more insurers are refusing to provide homeowners’ insurance; and part 2: With home insurance premiums through the roof, some homeowners go ‘naked.’