Hurricane Milton could become one of top ten costliest storms for insurers

Hurricane Milton is projected to rank among the top 10 most expensive storms for insurers in over a century, as per Moody's RMS Event Response. The hurricane's total private market loss is estimated at $26 billion, with possible figures ranging between $22 billion and $36 billion. This projection suggests that even the lowest estimate would place Milton in the top 10 of costliest tropical cyclones from 1900 to 2023, according to Aon's Climate and Catastrophe Insight report.

In contrast, Hurricane Helene, despite causing over 200 fatalities and an estimated $250 billion in damages, does not make the list due to much of its losses being uninsured.

Severe weather events like hurricanes can significantly impact home insurance premiums across various regions. The National Bureau of Economic Research indicates a strong correlation between disaster risk and insurance costs, where even minor increases in disaster risk can lead to notable rate hikes.

Historically, such disasters have led smaller insurers towards insolvency. Following Hurricane Andrew—the eighth-costliest storm—ten Florida insurers and one Louisiana insurer went bankrupt, with others facing financial challenges.

Florida stands out as the most expensive state for home insurance in the U.S., with an average annual premium of $11,759. While standard policies cover wind damage, flood damage requires additional coverage. Despite requirements for flood coverage in certain zones to secure mortgages, many homeowners remain unprotected against hurricanes and severe weather impacts.

The Federal Emergency Management Agency (FEMA) reports that while the national average premium for a National Flood Insurance Program policy is $1,290 annually, Florida residents pay slightly more at $1,363. Within Florida itself, rates vary; coastal Monroe County residents pay significantly higher premiums compared to those living inland.

As communities affected by these climate events begin recovery efforts, discussions on managing their increasing frequency continue among leaders nationwide. The Heritage Foundation's Project 2025 Presidential Transition Plan proposes ending NFIP and shifting flood insurance back to private markets. Meanwhile, Representative Jared Moskowitz has introduced legislation aimed at distributing climate catastrophe burdens across unaffected states' insurance companies.

Additionally, several states are encouraging insurers to promote resilience through property improvements by offering incentives or creating state-run programs like Colorado's initiatives.