Insurers ‘dodged a bullet’ as Hurricane Idalia slams rural areas

Publish Date: September 01, 2023

Written by Matt Carter

- Originally published at Inman News - Matt Carter

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The insurance industry “dodged a bullet” as Hurricane Idalia’s path took it over relatively rural areas with low population density and left much less destruction in its wake than Ian and other major hurricanes that hit southwest Florida last year, analysts said.

Researchers at Moody’s Analytics estimated Hurricane Idalia’s estimated total economic impact — which includes not only property damage but lost output — at $12 billion to $20 billion, within a footprint extending from Tampa to North Carolina.

The storm made landfall Wednesday at the “Big Bend” of Florida’s panhandle with the brunt of the impact being felt in sparsely populated Dixie, Levy and Taylor counties, Moody’s analysts said in their Weekly Market Outlook Thursday.

Lower home prices in hardest-hit counties

“Given the relative lack of economic activity and relative absence of land constraints, property values in the Big Bend are lower than they are for much of the rest of the state, further suppressing costs,” Moody’s analysts said, noting a median home value of less than $205,000 in the most severely affected counties.

But Moody’s analysts noted that Hurricane Idalia caused “significant but not catastrophic damage” across a wider geographical swath.

“Flooding was especially problematic in and around Tampa early in the event, and the storm surge also drove major flooding in Charleston, South Carolina. Along the way, downed trees and swelling rivers caused damage as well, leading to a price tag of $10 billion to $16 billion in property losses,” Moody’s analysts said.

“With flooding responsible for much of the damage, it will prove challenging for some affected areas to quickly get back on their feet,” Moody’s predicted. “Typical homeowners’ policies cover wind damage, but supplemental flood coverage has far lower penetration levels, which will leave some residents of areas that were hit hard holding the bag.”

Many homeowners in Idalia’s path were uninsured, BMS Group Senior Meteorologist Andrew Siffert reported on the insurance brokerage’s website Thursday.

“Overall, flood insurance has a low take-up rate across the path of Idalia, with inland counties seeing less than 5 percent take-up, while some coastal counties and southeast counties have 25 percent,” Siffert wrote. “However, this should not be a driver of insured loss for the insurance industry, which should still end up in the $3B to $5B range for the insurance industry.”

The lack of adjacent coastal exposure “likely helped the insurance industry dodge a bullet,” Siffert concluded. “We also know that a bit of luck can come from Mother Nature as an eyewall replacement cycle happened around landfall, and a bit of dry air entrainment weakening Idalia just before landfall.”

But Siffert warned that the Atlantic Hurricane season is “far from over” with the peak not arriving for another 10 days.

Fannie and Freddie outline mortgage relief for victims

Homeowners affected by Hurricane Idalia may be eligible to suspend their mortgage payments for up to 12 months or qualify for other relief, mortgage giants Fannie Mae and Freddie Mac reminded homeowners and loan servicers Friday.

“The health and safety of those affected by Hurricane Idalia is our most urgent concern,” Fannie Mae Chief Credit Officer Cyndi Danko said in a statement. “Once recovery efforts begin, we encourage homeowners experiencing hardship because of a natural disaster or storm to contact their mortgage servicer to discuss payment relief options as soon as possible.”

Freddie Mac reminded loan servicers that its disaster relief options are available to affected homeowners outside the declared disaster areas if a home incurs a disaster-related insured loss that impacts their ability to make their mortgage payments.

“We want homeowners to know that our mortgage relief options are here to help support their recovery once they are out of harm’s way,” Freddie Mac executive Bill Maguire said in a statement.

Fannie Mae gives mortgage servicers the authority to offer up to 90 days of forbearance to homeowners without establishing contact with them if they have reason to believe a home was affected by the disaster.

Homeowners who qualify for mortgage forbearance with Fannie or Freddie can get current on their mortgages again by making a lump-sum payment or requesting a repayment plan that allows them to pay a little more each month to make up for missed payments. Missed payments can also be deferred to the end of their mortgage term without incurring extra interest charges or penalties.

The Department of Housing and Urban Development (HUD) advises homeowners affected by disasters to contact their mortgage or loan servicers for assistance. FHA homeowners can call the FHA Resource Center at 800-304-9320 for additional information or visit the FHA Disaster Relief site.

HUD-approved housing counseling agencies are ready to help those impacted by natural disasters to obtain assistance by calling 800-569-4287. Homeowners do not have to have an FHA-insured mortgage to meet with a HUD-approved housing counseling agency, which does not charge fees for foreclosure prevention counseling.

Fannie Mae offers disaster-recovery counseling from HUD-approved housing counselors at Money Management International by dialing 855-437-3243 or by requesting an appointment through Fannie Mae’s website.

Freddie Mac provides information on recovering from a natural disaster, including frequently asked questions related to disaster and mortgage relief, online at My Home by Freddie Mac.

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