Hurricane Helene, a formidable Category 4 storm, made a devastating landfall on Florida’s Big Bend coastal region, unleashing sustained winds of 140 mph and even stronger gusts. The impact extended beyond wind damage, with storm surge flooding reaching levels not witnessed in the Tampa Bay area for over 80 years. As anticipated, Hurricane Helene’s expansive size meant its effects were widely felt across Florida and the southeastern United States, impacting not only coastal areas but also reaching far inland. The precise track of this major hurricane was always crucial in determining the scale of industry losses for insurance, reinsurance, and insurance-linked securities (ILS) markets.
The widespread impacts of Hurricane Helene are not limited to outward coastal effects. Due to its immense size, the storm penetrated deep inland, rapidly moving into Georgia while maintaining a well-defined eye. Gusts of 100 mph were still a possibility far from Florida’s Big Bend, highlighting the extensive reach of this Category 4 hurricane and its continued threat even after landfall.
Hurricane Helene made landfall around 11:20 pm Eastern time, packing sustained winds of 140 mph and a minimum central pressure of 938 mb. This pressure reading marks the lowest for a Florida hurricane landfall since Hurricane Michael in 2018. In terms of wind speed at landfall in the Big Bend region, Hurricane Helene was the most powerful since 1851, underscoring the historical significance of this event as a Category 4 hurricane.
Notably, Hurricane Helene is the fourth US Gulf Coast hurricane landfall of the 2024 season. Historical records reveal that only five other years since record-keeping began have seen this many hurricanes strike the Gulf Coast, making 2024 an exceptionally active hurricane season.
The intensification of Hurricane Helene was remarkably rapid. It escalated from a Category 1 hurricane to a Category 4 hurricane in less than twelve hours. Experts suggest that had the storm organized itself earlier and not encountered dry air initially in the Gulf of Mexico, its peak intensity might have been even greater, potentially reaching Category 5 status.
The United States has now experienced eight Category 4 or 5 hurricane landfalls in the past eight years, with seven of these impacting the continental US. This is a stark contrast to the preceding 57 years, which saw an equal number of such intense hurricane landfalls, indicating a potential increase in major hurricane activity in recent times.
Given the late-night landfall of this Category 4 hurricane, initial damage reports from the immediate landfall area are limited. Storm surge in this sparsely populated region was projected to reach up to 20 feet, and evacuations were largely carried out in advance.
However, reports are emerging from more densely populated areas, particularly Tampa, detailing a significant and widespread storm surge event. Water gauges in the Tampa Bay area are reported to have reached or exceeded record levels across the board. While the surge has begun to recede, the region has experienced its highest storm surge in over 80 years, with water levels reaching close to the forecasted 8 feet.
Aerial view of flooded streets in Tampa Bay after Hurricane Helene
Clearwater also experienced a substantial storm surge, reaching approximately 6 feet and surpassing the previous record by about 2 feet. Coastal communities like Cedar Key and St. Petes also faced significant flooding from Hurricane Helene. The coastal impacts stretched far beyond the immediate landfall zone, a characteristic anticipated with such a large Category 4 hurricane.
Assessing the financial toll of storm surge events like this on the insurance and reinsurance industry is always complex. Flood coverage in US insurance policies is not as comprehensive as in many other parts of the world. However, storm surge tends to contribute more significantly to industry losses compared to pluvial flooding. Therefore, the extensive storm surge from Hurricane Helene could lead to higher industry-wide losses than initially projected.
In addition to storm surge, significant pluvial flooding is expected. Rainfall totals along Hurricane Helene’s inland path are anticipated to reach up to 10 inches widely, with isolated totals as high as 20 inches. This heavy rainfall will undoubtedly exacerbate flooding concerns across the affected regions.
Within the insurance-linked securities (ILS) market, storm surge coverage is typically included in US named storm catastrophe bonds. However, it remains too early to determine if the storm surge losses from Hurricane Helene will be substantial enough to trigger indemnity losses for any catastrophe bonds.
The NFIP catastrophe bonds under the FloodSmart Re program are particularly relevant here, as they are explicitly exposed to storm surge events. While Hurricane Helene caused a widespread storm surge, the levels of inundation were not as extreme as those seen with recent hurricanes like Ian. Nevertheless, FloodSmart Re cat bonds warrant close monitoring as more information becomes available regarding the extent and costs of the storm surge. It is possible that these bonds will ultimately remain unaffected, depending on the volume of NFIP flood insurance policy claims.
Industry loss forecasts and modeled loss scenarios leading up to landfall indicated potential losses in the mid-single-digit billions, with some reaching the high-single-digit range.
Andrew Siffert of BMS commented late yesterday, “Right now, insurance losses should end up below $8B, with a likely range between $4 -$5.5B,” aligning with reinsurance broker Gallagher Re’s earlier estimate of up to $6 billion if Tampa avoided a direct hit.
However, the accuracy of these modeled loss forecasts in capturing the widespread storm surge and inland impacts of a still-hurricane-force storm entering states beyond Florida remains uncertain. Despite this uncertainty, the current market consensus suggests a single-digit billion-dollar private and public insurance market loss from Hurricane Helene. As data and insights emerge throughout the day, more refined early estimates are expected.
Consequently, while the Big Bend landfall scenario played out, avoiding the potentially worse outcome of a landfall further east, some uncertainty persists regarding the ultimate insurance and reinsurance market losses. This is primarily due to the extensive storm surge and the potential for significant inland impacts from Hurricane Helene.
Despite this lingering uncertainty, the prevailing expectation is that primary insurers will bear the majority of Hurricane Helene’s losses. Reinsurance capital is anticipated to absorb a smaller proportion of the overall loss, and catastrophe bonds and ILS arrangements are generally expected to remain protected from direct losses. However, there is always a possibility of aggregate deductible erosion, quota share claims leakage, and some uncertainty surrounding more surge-exposed entities in the market. Clarity on these aspects should emerge later today as daylight reveals the full scope of damage caused by Hurricane Helene.
Aerial view of flooded streets in Tampa Bay after Hurricane Helene
Even two hours post-landfall, at 2 am Eastern time, Hurricane Helene was estimated to maintain sustained winds of 90 mph as it passed Valdosta, Georgia. This illustrates the potential for inland claims to arise from this powerful Category 4 hurricane, extending far beyond the initial landfall zone and highlighting the far-reaching impacts of Helene Cat 4.
