As President Joe Biden toured the damage from Hurricane Milton on Sunday, the unofficial death toll rose to more than twenty, and more than a million Floridians were reported to be without power. The impact of the storm, although major, was less severe than some forecasters had feared. But with Milton coming in the wake of Hurricane Helene, which devastated parts of Florida, North Carolina, and other states, the 2024 hurricane season represents a threshold-crossing of sorts. Extreme-weather events accentuated by climate change are having major economic consequences and creating difficult challenges for all levels of government—local, state, and national. And now right-wing conspiracy-mongers are deliberately complicating the efforts to tackle the problem.
One of those conspiracy-mongers is the Republican candidate for President. On October 3rd, at a rally in Michigan, Donald Trump promoted a false claim, which had been circulating widely on social media, that the Federal Emergency Management Agency (FEMA) was running out of money because it had diverted resources to migrants. “Kamala spent all her FEMA money, billions of dollars, on housing for illegal migrants,” he said. Subsequently, other MAGA Republicans went so far as to claim that the government itself was responsible for the storms. (“Yes they can control the weather,” Marjorie Taylor Greene commented, on X.)
As cleanup efforts proceed in Florida and farther north, Congress will indeed need to replenish FEMA’s main disaster fund, but this has nothing to do with the agency’s migrant programs, which are financed out of a separate fund. The issue is that the disaster fund has already been partly depleted from dealing with earlier calamities, including floods, tornadoes, and wildfires. Since House Speaker Mike Johnson has refused to call the body over which he presides back into session before the election, the necessary top-up won’t take place prior to November 5th.
In our degraded political environment, making sure that FEMA has adequate funding and that effective policies are in place is far from a trivial matter. Whenever more disaster relief is appropriated, we need to make sure it gets to those who need it most, particularly those who are marginalized or economically disadvantaged. “A large body of research documents that under-resourced communities and lower-income households suffer disproportionately from disasters,” a group of researchers associated with the Brookings Institution noted in an article published last year.
But guaranteeing the effectiveness of disaster relief, important and challenging as it is, represents only a small part of the policy agenda that is necessary to confront the realities that the country faces as extreme-weather events become more common. Another issue that demands urgent attention is the expanding crisis in the home-insurance industry, which turns out to be utterly unprepared for rising sea levels and other products of climate change. In the Blue Ridge Mountains of North Carolina, where rains brought on by Helene did untold damage, the vast majority of homeowners didn’t have the flood insurance that the federal government provides through the National Flood Insurance Program. The uninsured will now be responsible for any flood rebuilding costs not covered by FEMA. (The agency provides homeowners who make it through the lengthy application process with grants of up to forty-two thousand and five hundred dollars for rebuilding. Actual costs can be much higher.)
Even in Florida, where hurricanes are frequent, and in many coastal areas, including Miami, that are threatened by rising sea levels, more than four out of five homeowners don’t have flood insurance. Cost is one factor. The average price of flood insurance in the state is about eight hundred dollars a year. Inertia is also in play. Until recently, most homeowners not directly on the coast didn’t think it was necessary to insure against floods.
But it’s not just flood risks that aren’t being covered. As major insurers pull back from areas at high risk of any climate disaster—in states like Florida, California, and Colorado—finding affordable home-insurance policies is becoming more difficult in many other places, too. According to the Consumer Federation of America, from 2017 to 2022, average premiums rose about forty per cent faster than inflation, as measured by the Consumer Price Index, and government figures show they have continued to rise rapidly since then. “With the effects of climate change intensifying, the risks and insurance problems associated with them are no longer just coastal—they affect everybody,” Doug Heller, the director of insurance at the Consumer Federation, told me.
As the insurance industry faces rising criticism from aggrieved homeowners and the politicians who represent them, some of the industry’s leading figures have been highlighting what they see as the crux of the issue. “You’ll never find an insurer saying, ‘I don’t believe in climate change,’ ” John Neal, the C.E.O. of Lloyd’s of London, the insurance behemoth, told the Financial Times a few months back. “The frequency and severity of weather-related losses are exponential.” Testifying to Congress last year, Eric Andersen, the president of Aon, the world’s largest reinsurance intermediary, said, “Just as the U.S. economy was overexposed to mortgage risk in 2008, the economy today is overexposed to climate risk.”
Traditionally, home-insurance providers such as State Farm, Allstate, and Liberty Mutual reduced their potential liabilities by taking out “reinsurance” contracts with companies like Swiss Re and Munich Re that specialize in covering catastrophic risks. If disaster strikes—a hurricane, an earthquake, a raging wildfire—the reinsurers help the insurance companies to pay the claims that their customers file. But as the costs inflicted by extreme weather have mounted in recent years—in 2022, Hurricane Ian alone generated insurance losses of about sixty billion dollars—reinsurers have raised their premiums sharply, which has had a big impact on the finances and behavior of insurers. Last year, the insurance company Farmers announced it was withdrawing from Florida completely. This year, State Farm said it wouldn’t renew tens of thousands of household policies in California.
With gaps in the home-insurance market growing, public-sponsored policies of last resort, known as Fair Access to Insurance Requirements (FAIR) plans, have played an increasingly large role. For instance, Colorado recently created its own FAIR plan, while California’s existing plan has seen a dramatic spike in use. Though such policies are clearly better than nothing, they are generally much more expensive and less comprehensive than regular policies. (For example, they sometimes don’t cover water damage.) Simultaneously, smaller, thinly capitalized private insurance companies have been entering some high-risk markets, offering coverage that they may not be able to back up if disaster strikes. According to a study of the Florida market published last year by researchers from Columbia, Harvard, and the Federal Reserve, “These new insurers service the riskiest areas, are less diversified, hold less capital, and 20 percent of them become insolvent.”
As the crisis worsens, some observers are demanding a national solution. Heller, the Consumer Federation insurance director, is calling on Congress to establish a federal reinsurance facility—a publicly run version of companies like Swiss Re—that would enable major companies such as Allstate and Farmers to insure themselves against natural disasters more cheaply. Under Heller’s proposal, the federal reinsurer would charge premiums appropriate to the risks, and private insurers would be required to reënter the markets they’ve abandoned, offering full coverage. The impact of Helene and Milton “amplifies that we can’t just be sitting on the sidelines and hoping that the market will solve the problem,” he told me. “To stabilize the property-insurance market, there needs to be a public backstop.”