Flood Insurance Lessons Learned from the 2020 Hurricane Season

At long last, the 2020 Atlantic hurricane season has officially ended. The grim statistical tally highlights a dramatic year, the most active in recorded history.

This year saw 30 named storms and 13 hurricanes, of which 6 were major hurricanes of Category 3 or higher on the Saffir-Simpson scale. Students of Greek linguistics were I’m sure thrilled, but the rest of us tired of seeing another Greek alphabet storm appear in the tropics, running all the way through Iota in mid-November.

Of the 13 hurricanes, a record 12 made landfall in the U.S., versus a historical average of 1.75 per year. As a point of reference, in the entire decade of 1971-1980, there were 12 landfall hurricanes; 2020 had 12 just this year. Total damage is estimated to be between $35 billion and $40 billion.

There are several lessons to be learned from the 2020 season that can help guide our actions in future years:

1.) Flooding is more frequent than in the past, and likely to get worse. Eighteen of the past 26 years have had higher than average hurricane activity. Slow moving storms like Sally, and Harvey, Imelda and Florence in recent years, are becoming more common, increasing the risk of rain-induced inland flooding on the back of a hurricane. Many coastal areas are observing higher high tides, leading to increased flooding during, and also not during, storms.

2.) The potential losses were much worse than the actual losses. Despite a record number of storms and billions in damage, experts say that it could have been much worse, as major metropolitan population centers were largely missed by the hurricanes. For example, if Hurricane Isaias was a little more intense and tracked 50 miles closer to the Southeast coast, according to one modeling firm, it would have been the “worst case scenario” of all the modeled storms.

3.) Just because a storm has not hit recently does not mean that homeowners should not protect themselves with flood insurance. Many people who thought they were not at risk, in fact suffered losses and were uninsured. Often, areas that have not experienced storms for many years have a lower uptake of flood insurance. This year, Alabama had its first tropical cyclone landfall since 2004. Louisiana had five storms make landfall in the state. The Tampa, Fla., area was brushed by Eta, the first storm in decades to directly affect the region.

4.) Preparation is more important than ever before. Several storms did not follow the usual Atlantic track from West Africa, and instead started as rain showers in the islands, then rapidly escalated into powerful hurricanes in the Caribbean and Gulf of Mexico. Ocean temperatures are warmer, further contributing to rapid intensification, and causing many to believe that evacuation was unnecessary until it was too late.

As has been the case in 2020 with other catastrophes, just because it should be over doesn’t mean it’s really over. Since 1966, 45 named storms have formed in December, and in 2005 there was one in late December. The trends also indicate a strong potential of continued flood risk in 2021 and beyond, and reinforce the point that a historical flood zone or perception of flood risk are not good indicators of future risk.

The good news is that municipalities, states, insurance regulators, and even tangential industries such as real estate and banking are increasingly aware of flood risk. Flood insurance is easier to purchase than ever before, thanks to digital platforms. A FEMA report produced recently identifies an average of $1.5 billion in loss damages averted by the establishment and enforcement of new building codes in states like Florida, Texas, California, South Carolina, and others. Homeowners have a range of options to mitigate their potential losses by floodproofing their homes.

A concerted effort of education, responsible and careful regulation, mitigation, and insurance industry product diversity is required to improve the current situation, enabling a higher level of protection and coverage for homeowners and business owners in the United States.

As 2020 has made very clear, the risk is not going away.