GC’s Darr: Unprecedented speed and scale of Helene raises important questions for industry
Hurricane Helene’s rapid escalation and widespread impact have set new records, according to Guy Carpenter’s managing director and head of North America peril advisory Josh Darr, prompting the industry to assess the full scale of losses while highlighting the evolving challenges posed by extreme weather events.
"Helene was a storm of extremes, driven by several distinct factors," Darr explained.
"The storm moved at an unprecedented speed of 26 miles per hour as it approached Florida’s Big Bend, breaking previous records for a storm of its size. Additionally, Helene’s size [put it] among the five largest storms ever recorded in the Gulf of Mexico. These factors, combined with warm sea surface temperatures, created a scenario that amplified the storm’s destructive capacity,” he said.
Speaking with The Insurer TV, Darr noted that Helene’s rapid intensification from a tropical storm to a Category 4 hurricane was heavily influenced by the season's warmer-than-usual sea surface temperatures (SSTs).
The Gulf of Mexico provided “optimal conditions” for Helene’s escalation, further accelerated by a jet stream trough over the Ohio and Mississippi River Valley.
"The storm’s speed and sheer size resulted in widespread damage not only from wind, but from storm surge and significant inland flooding across the southeast," Darr said.
As footage continues to reveal the extensive water damage left in Helene’s wake, Darr pointed out that water-related events were a significant driver of losses.
"Helene was unique in that it produced devastating flooding far inland, particularly in the Appalachian Mountains," Darr observed. "Warm SSTs and atmospheric moisture levels acted like a sponge, holding significant moisture and releasing it over a prolonged four-to-five-day rainfall event. This led to record flooding in areas that typically don’t face such extreme conditions."
Sea level rise also played a critical role in intensifying Helene’s storm surge, particularly along Florida’s western coast.
"Over the past century, Florida’s coastline has seen 12 to 18 inches of sea level rise, which added to the storm surge we saw in places like Tampa Bay and St Petersburg, where water levels reached 2 to 2.5 feet above normal," Darr explained. He underscored that Helene’s devastating water impacts were a direct result of evolving climate conditions.
While Darr praised the accuracy of the forecasting from agencies like the National Hurricane Center, which gave advance warnings and correctly predicted Helene’s landfall, he noted that the scale of the event still exceeded expectations. "The forecast was spot on in terms of landfall and storm intensity, but it’s always challenging to fully grasp how widespread the damage will be, especially when you have such a large event with both wind and water impacts.”
Wind and water damage
One of the major challenges facing insurers in the wake of Helene is the intersection of wind and water damage, particularly when policy terms come into play.
"In the US, most properties are covered for wind damage, but flood coverage is far less common and typically only required in specific flood zones or for certain mortgages," Darr explained.
"This can lead to complications where a homeowner without flood insurance tries to make a claim on their wind policy, which may be denied. But insurers still bear the cost of assessing these claims, even when no payout is made."
Innovations in technology, particularly high-resolution flood mapping and imagery, are helping the industry more accurately assess damage and assign causes of loss. "Flood footprint mapping has greatly improved the industry's ability to distinguish between wind and water damage, reducing the gray areas that have historically complicated claims," Darr said. "This is particularly helpful in areas like Florida’s Big Bend, where both elements were in play."
Darr also touched on the widening protection gap – the disparity between insured losses and total economic losses. "Hurricanes with significant water damage, like Helene, tend to have a much larger gap between insured and economic losses," he said.
"In past events like Hurricane Harvey, insured losses were only a fraction of the total economic cost. Helene could potentially see a similar outcome, where the economic damage far exceeds what insurers ultimately pay out."
Collateral losses
Looking forward, Darr highlighted both positive and concerning trends for the industry. "The bright spot here is Florida’s strict building codes, which have proven effective once again," he said. "Newer construction in areas like St. Petersburg held up well against both wind and flood, showing that resilience measures are making a real difference."
However, Darr also warned of potential long-term economic impacts, particularly in regions with less flood insurance penetration.
"There’s a risk that property values could depress in areas where flood damage was significant, and that could ripple through local economies. We might also see disruptions to supply chains, especially with infrastructure down and ongoing challenges like the potential port strikes on the US east coast."
In a unique twist, Darr mentioned the potential impact of flooding on a key mine in Spruce Pine, North Carolina, which produces high-quality quartz essential for semiconductor production. "This mine supplies the highest-quality quartz in the world, and any disruption could have global ramifications, particularly in the semiconductor industry."
As the industry continues to assess the full impact of Hurricane Helene, Darr emphasised the need for continued adaptation and innovation.
"This storm is another reminder that we must be prepared for a future with increasingly severe weather events. The industry has made significant strides, but there is still work to be done, particularly in addressing the protection gap and understanding the long-term economic consequences of these storms,” he concluded.