The 2023 Hurricane Season: Are Insurers Prepared for the Growing Risks?

This post is part of a series sponsored by CoreLogic.

As the 2023 Hurricane Season approaches, it is crucial for coastal and inland communities alike to understand and prepare for the potential risks associated with hurricanes. The North Atlantic Ocean experiences a significant increase in hurricane activity from June 1 to November 30, posing a higher probability of wind and flooding-related property damage. Recent trends indicate that hurricane risk is extending further inland, making it essential to be proactive in addressing this evolving threat. The CoreLogic® 2023 Hurricane Risk Report sheds light on the impact of climate change, the elements of a hurricane, and the geographic shifts in risk.

Evidence suggests that climate change is affecting hurricane activity in the North Atlantic Ocean. There are a higher proportion of stronger hurricanes, particularly Category 3 and above, which have the potential to travel further inland before dissipating. This trend poses significant risks to properties that were once considered safe from hurricane-related damage. With climate change intensifying the storms, U.S. properties are facing a substantial impact in the coming years.

To fully comprehend the risks associated with hurricanes, it is crucial to understand the primary hazards they pose. Hurricanes bring strong winds and flooding, which are the key elements that cause extensive damage and devastation. Wind plays a major role in hurricanes, and even Category 1 hurricanes can produce perilous wind speeds that result in property damage.

Storm surge occurs when a hurricane pushes water onto the shore, often resulting in depths exceeding ten feet, depending on the storm’s intensity and landfall location. This phenomenon can wipe out entire coastal communities and extend far inland, posing a threat to critical infrastructure. Inland flooding is a significant concern for homeowners residing farther away from the coast. It occurs when precipitation accumulates rapidly, leading to flash flooding or riverine flooding when rivers and lakes surpass their capacity.

The CoreLogic® 2023 Hurricane Risk Report offers a comprehensive analysis of hurricane risk at both national and metro levels. It identifies over 32 million single-family residences (SFRs) and one million multifamily residences (MFRs) at risk of sustaining damage from hurricane-force winds. Approximately 7.8 million of these homes have direct or indirect coastal exposure, making them susceptible to storm surge flooding.

The report’s metro area analysis highlights regions with substantial hurricane wind risk, such as the New York City metro area, the Houston-Woodlands-Sugarland area, and the Miami-Ft. Lauderdale-Pompano Beach area. While hurricanes are more likely to make landfall in South Florida or along the Gulf Coast, the New York metro area exhibits a higher risk due to population density and proximity to the coast.

The Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) plays a crucial role in evaluating catastrophe modeling software and methodologies for projecting hurricane and flood losses. The FCHLPM’s certification process ensures that the models used by insurers meet rigorous standards of scientific, actuarial, civil engineering, and statistical integrity. As of June 1, 2023, the CoreLogic North Atlantic Hurricane Model received FCHLPM certification, continuing its consistent track record of being accepted for usage by insurers in the Florida property insurance market.

The 2023 Hurricane Season presents significant risks for coastal and inland communities, requiring comprehensive understanding and preparedness. Climate change is amplifying the intensity and reach of hurricanes, increasing the threat to properties previously deemed safe. The CoreLogic® 2023 Hurricane Risk Report underscores the vulnerability of millions of homes, with coastal exposure exacerbating the risk. As we face the growing risks of the 2023 Hurricane Season, it is imperative for insurers and communities to take proactive measures to mitigate the potential impacts and safeguard lives and properties.

Topics
Carriers
Catastrophe
Natural Disasters
Florida
Hurricane