Hurricane Laura made landfall near Cameron, Louisiana, in the early hours of Thursday, buffeting the coastline with winds estimated at 150 mph. Colorado State University hurricane expert Phil Klotzbach noted on Twitter that Laura tied for fifth place in terms of the 10 "strongest continental U.S. #hurricane landfalls on record (since 1851)." The storm has thus far killed seven people, including, as reported by CBS News, a 14-year-old girl and a 68-year-old man, and it left a path of damage and ruin across parts of Louisiana and Texas. As with so many disasters before, once the immediate danger of the storm itself is past, it will fall to many in its path to rebuild—including homeowners who have lost or seen their homes severely damaged.
And in a year still reeling from the ongoing health and economic impacts of COVID-19, the road the recovery could be even more difficult.
"I will tell you the damage was extensive," Louisiana Gov. John Bel Edwards told CNN. "The wind speed was as promised. Right now I believe we got a break on the storm surge—about half of what was projected."
However, USA Today reported that National Hurricane Center storm surge specialist Jamie Rhome said that the center's "initial analysis indicate it was as bad as feared in Cameron Parish."
According to the National Oceanic and Atmospheric Administration's forecasts conducted last May, the 2020 hurricane season could produce 16 to 18 storms nationwide this year. That's all the more troubling when you consider a recent survey finding that, while 86% of homeowners in high-risk states say they feel prepared for this year's hurricane season, one-third haven't taken any steps to actually prepare against storm damage.
“While more than half of respondents say their homes could experience flood damage from a storm, 34% inaccurately believe that the damage would be covered by their home or renters insurance policy,” the report from ValuePenguin noted. It added that "over one-third were unaware that they would need flood insurance to protect their homes and possessions from a storm surge or heavy rains.”
Many homeowners in high-risk areas also weren't sure how much insurance they would need to be fully protected against hurricanes. More than 37% didn't know if they had enough coverage. Moreover, 42% incorrectly estimated the average cost of repairing hurricane damage to be under $10,000 — significantly lower than the $42,000 average flood claim, according to the Federal Emergency Management Agency (FEMA).
On the side of industry impact, servicers will be implementing industry playbooks established by previous storms in order to communicate with and assist impacted homeowners, as well as monitoring and dealing with damages to any REO properties. A CoreLogic forecast earlier this week, housing damage from Hurricane Laura could total more than $88 billion.
“The coincidence of two catastrophes—a damaging hurricane season and the ongoing global pandemic—underscores the importance of the correct valuation of reconstruction cost, one of the core tenets of property insurance,” said Tom Larsen, Principal for Insurance Solutions at CoreLogic. “Homeowners, mortgage lenders, and insurers need to work together to ensure properties are fully protected and insured. CoreLogic data has found a correlation in mortgage delinquencies and catastrophes, which could point to a serious issue of underinsurance trends.”
A.M. Best also emphasized the likely impacted on insurance companies' balance sheets, with a Business Wire report on a new A.M Best commentary explaining that "reinsurance may help mitigate losses, but will challenge future risk management strategies, as loss-affected areas will see increases in reinsurance rates that are already hardening."