As anticipation mounts for the 2024 Atlantic hurricane season, forecasted to be particularly active, concerns over escalating insurance premiums grip Gulf Coast residents. The National Oceanographic and Atmospheric Administration (NOAA) recently issued projections indicating an 85-percent likelihood of an “above-normal” hurricane season, fueling fears of potential devastation and financial strain.
According to a report by Newsweek, insurance experts warn that the impending season may exacerbate an already burgeoning crisis, as climate change intensifies storm activity and raises temperatures. Betsy Stella, Vice President of Carrier Management & Operations at Insurify, cautioned Texas homeowners about the future impact of climate risks on insurance costs, drawing parallels with Florida’s insurance market challenges.
Florida currently boasts the highest insurance premiums in the nation, averaging $10,996, while Texas follows closely with an average premium of $4,456. The Lone Star State witnessed a staggering 22-percent increase in insurance rates in 2023, double the national average, amidst a record-breaking year for natural disasters.
Recent weather catastrophes, such as the May derecho that inflicted billions of dollars in damages on the Houston area alone, underscore the mounting risks faced by Gulf Coast residents. Marketplace reported a surge in insurance claims following the derecho, foreshadowing the financial toll of future storms.
As insurers grapple with escalating risks, Temple University Fox School of Business professor Benjamin Collier cautioned that some may opt to exit high-risk markets altogether, mirroring past trends in terrorism, cyber, and earthquake insurance. While Rich Johnson of the Insurance Council of Texas reassured that companies haven’t yet abandoned the state entirely, reports indicate a growing trend of insurers discontinuing coverage for Houston clients.
ABC13 highlighted instances of residents being denied policy renewals due to their proximity to hurricane zones, signaling a potential trend of insurers withdrawing from high-risk areas. Despite concerns over insurability, Stella remained optimistic, suggesting that market demand may attract new providers, albeit at a premium.
As the Gulf Coast braces for an active hurricane season, the looming threat of soaring insurance premiums adds another layer of uncertainty for residents already grappling with the impacts of climate change.
