US Hurricane Insurance Costs Continue to Spiral
Forecasters predict 2025 will see an ‘above-average’ level of US hurricane activity, with up to four major hurricanes predicted. Hurricanes cause an estimated $23 bn USD of damage every year in the US.
In 2024 alone, Hurricanes Milton and Helene cost insurers a total of $54 bn (USD) as they brought devastating winds, storm surges and rainfall-induced flooding across Florida’s gulf coast. This year looks to be elevated again with above average sea surface temperatures and a near-neutral ENSO (El Nino Southern Oscillation) unlikely to dampen hurricane formation.
While Floridian and other US Gulf states turn their attention to safeguarding lives and properties this year, repeated years of hurricane losses has led to a worrying trend in recent years of rapidly escalating insurance rates leaving many US homeowners unable to buy hurricane insurance, or else having to rely on state-backed insurance schemes (e.g. Citizen Property Insurance hurricane scheme) that don’t indemnify the full value of their property. It’s estimated that around one in five homeowners in Florida have now decided to forgo coverage altogether. It’s important to mention that increasing loss impacts from hurricanes are also a factor of an increasingly exposed population centres. Florida was the fastest-growing US state in 2022 with an annual growth rate of 2%.
Impact of resilient houses
Despite these challenges though, US regulators have progressively brought in stricter building codes enforcing stronger roof constructions, impact-resistant windows and in many cases flood defence measures (to combat coastal flooding). All of which helps in mitigating losses and lowering repair costs and ultimately reducing the financial burden of many events. For many years, insurers have been offering a premium reduction in return for retrofitted buildings. But what impact do these measures have, and how will that change over time?
Transzero decided to explore this question through modelling the potential impact that improved climate-resilient properties could have on a geographically diversified US property asset investment portfolio. By analysing the same portfolio both with and without climate adaptation measures, the team wanted to see the return on investment (ROI) these initiatives could have both now and under alternative IPCC climate change scenarios through the 21st century.
Figure 1: US Sample Investment Portfolio - average losses per year due to wind risk in 2050. Inset: TransZero wind hazard map.
The portfolio comprised of a random sample of 200 investment locations which were analysed by TransZero’s platform for eight different climate perils including hurricane wind and flood risk. Underpinned by a 10,000 year stochastic event set of simulated hurricanes, the 100-year wind speed risk identified the highest risk properties to be in and around the gulf regions of the US (highest risk locations shown in yellow in Figure 1).
Figure 2: Hurricane losses before and after client resilient measures have been implemented - average losses per year 2025-2100. 41% reduction by 2050 with effective measures.
Assuming no specific investment in retrofitting of climate adaptation measures to improve the assets modelled, it was estimated that 46 % of locations would expect to see some level of damage. Loss magnitude varied greatly though impacted properties saw an annual average damage cost of $3000 a year, with a small proportion of properties seeing annual losses exceed $10,000 USD a year. Losses to the portfolio represented 0.17% per annum of the overall exposure value, with 89% of damage coming from wind and 11% from flood in low lying coastal areas. Based on Transzero’s climate change impact model, analysis anticipates that these losses could increase by 30% in 20504.
The second stage of the research involved re-running analysis but with an assumed improvement in all buildings having climate resilience measures for both wind and flood. As Figure 2 highlights, this saw significant reductions in average loss, including the potential for a 41% reduction by 2050 despite the predicted increases we could see in hurricane risk in the future.
As the insurability of many regions in the world continues to be challenged by increasing exposure and impact to extreme climate risks, it’s vital that climate adaptation is at the forefront of improving our global resilience. This study represented only a small sample but it demonstrates just a fraction of the growing financial benefits of a resilient net zero transition.
Transzero are a team of dedicated climate risk specialists, helping businesses understand how climate risk will impact their business. If you’re interested to learn more about the Transzero’s climate risk services, please contact info@transzero.co.uk
© 2025 TransZero Ltd