Last year, we wrote a blog called “When Insurance Gets Risky.” In it, we summarized how the re-insurance market works and what it means for the average citizen who, frankly, couldn’t care less. This year warmer ocean temperatures continue to lead to devastating geological events like Hurricanes Milton and Helene that threaten areas of our country that were largely unimpacted by such storms. If you need a refresher on how hurricanes work and why climate change is such a big factor in the frequency and strength of storms, check out the science behind these storms and a fascinating discussion about today’s blog topic here.

One of the aspects of this year’s hurricanes that rightfully attracted a lot of media coverage was the unanticipated impact of Hurricane Helene’s record-breaking rainfall that dropped on Western North Carolina. The last record flood event for Western NC was in 1916 when the are received rainfall of about 22 inches; this year, more than 36 inches of rainfall pummeled North Carolina over the course of three days, inciting flash floods and incredible amounts of loss and damage and drumming up billions in insurance costs and payouts.

These situations beg the question: as we continue on this path, will we be able to afford life in coastal areas? Will it be worth the risk?

In a recent episode of the All-In Podcast, the same we referenced last year in our blog, the hosts once again get into the economics around reinsurance and housing, this time looking at the billions of dollars of coverage needed in Florida as a result of Hurricane Milton. With more hurricanes almost guaranteed in the future of our country, at what point do businesses and homes become extremely costly to insure or even uninsurable due to their near certainty of being damaged—if not destroyed—by natural disasters?

The risk has a cost, and that cost is determined by a variety of factors. Some, like the weather, are known to be unpredictable. Other factors, like government flood maps, are helpful—although recent analysis discredits the reliability and relevancy of even these presumably dependable sources. Understanding how these factors, data, and analyses come together to create a final insurance rate takes professionals who fully understand the insurance market, can anticipate the change of risk over time, and can make recommendations for how to move forward.

Organizations need to understand the risk environment in which they operate and the potential cost of doing business in certain areas—where risk is higher, the cost of protecting an organization against that risk increases. If your organization is approaching a situation in which the full scope of risk is undetermined, or the rate at which protecting your organization is increasing rapidly, connect with us. We can help you break down the factors that will impact you most, prioritize your decisions, and determine what you need to move forward with confidence.

Cover image: https://spaceplace.nasa.gov/hurricanes/en/