Outside the Box
Traditional insurance models aren’t able to handle escalating natural disaster risks
Last Updated: Feb. 8, 2025 at 4:32 p.m. ET
First Published: Feb. 4, 2025 at 7:41 a.m. ET
The Los Angeles wildfires have caused economic losses currently estimated in the range of $250 to $275 billion. Meanwhile, insurance is disappearing. Many homeowners now choose to go skip insurance altogether, owing to the difficulty of obtaining coverage at all or even at a reasonable price. Insurance coverage has been diminishing in many respects, with rising deductibles and exclusions that effectively mean there is less true coverage.
Hurricane Helene struck the southeastern United States in September 2024, resulting in total personal property damages between $31 and $48 billion, of which $20—$30 billion were uninsured flood losses. The averages of these ranges indicate that insured losses covered about two-thirds of the total damages — leaving property owners responsible for the remainder. In North Carolina’s Buncombe County, where flooding from Hurricane Helene resulted in over 57 fatalities, federal flood insurance covered less than 1% of homes.
