Hurricane Milton: Further destruction for Florida and Implications for the Insurance Industry
- Briefing Note 508
Less than two weeks after Hurricane Helene (Risk Frontiers Briefing Note 506) struck the Big Bend region of Florida, a second major hurricane, Hurricane Milton, once again made landfall in Florida on October 9th as a Category 3 system. It caused further damage and destruction to Florida, with strong winds, large storm surge and spawning of several tornadoes.
Similar to Helene, Milton’s formation was influenced by the Central American gyre (CAG). Milton peaked as a Category 5 hurricane with maximum 1-minute sustained winds of 285 km/h, and gusts of 315 km/h. It was the fifth-most intense Atlantic hurricane on record, with a central pressure of 897 mb at peak intensity.
As Milton approached Florida there were dire warnings it would be one of the worst events in history, and effectively unsurvivable. Fortunately, Milton downgraded to a Category 3 hurricane before making landfall near Siesta Key, south of Tampa on the western coast of Florida. At landfall, it had sustained winds of 205 km/h with gusts of up to 230 km/h. It brought up to 30 cm of rainfall, and storm tide up to 3 m (storm tide is the storm surge in conjunction with the tide). The atmospheric conditions associated with Milton led to the formation of 39 tornadoes, and multiple sinkholes opened up across the state.
As of late October, 35 people have lost their lives. Initial insured loss estimates by one model vendor were between $8-14 billion USD while another estimated $30-50 billion USD. Fitch Ratings estimate was $50 billion USD.
Formation
Milton formation was influenced by a CAG in the Bay of Campeche. Days before Milton formed, there was broad disorganised thunderstorm activity from the western Caribbean to the southern Gulf of Mexico. A low-pressure trough moved within an active CAG from the southeastern into the southwestern Gulf of Mexico, resulting in increased thunderstorm activity in the Bay of Campeche. The persistent thunderstorm activity then led to the formation of an area of low pressure, and on the 5th of October it was classified as a tropical depression. Within hours, the depression developed into Tropical Storm Milton and reached hurricane status on the 7th of October.
On the same day, Milton rapidly intensified to a Category 5 hurricane. Its central pressure dropped by 50 mb in ten hours, which was the third fastest period of rapid intensification in the Atlantic, driven by record sea surface temperatures, high humidity, and low wind shear conditions. At peak intensity, it had a pressure of 897 mb, making it the fifth-most intense hurricane in the Atlantic, with 285 km/h 1-minute sustained winds. Milton maintained peak intensity for 6 hours before it began to undergo an eyewall replacement cycle, a process where some of the outer rainbands strengthen and organise into a ring of thunderstorms (outer eyewall) which robs the inner eyewall of its required moisture and angular momentum. The outer eyewall then slowly moves inward until eventually replacing the original inner eyewall completely. This led to Milton fluctuating between a Category 4 and Category 5 hurricane before downgrading to a Category 3 just before making landfall.
Landfall
Hurricane Milton made landfall late on the 9th of October as a Category 3 hurricane. It crossed the coastline near Siesta Key, Florida. It had maximum sustained winds of 205 km/h, with gusts of up to 230 km/h. At landfall, Milton interacted with a band of extra-tropical “jet-like” atmospheric disturbance which enhanced Milton’s windspeeds on its left (northern) side resulting in the strongest winds being observed north of the track in the Tampa bay area. This surprised forecasters as in most cases, the strongest winds are observed on the right (left side in the southern hemisphere) side of hurricanes as the broader atmospheric flow velocity adds onto the hurricane winds. Milton rapidly weakened as it moved across Florida and into the Atlantic Ocean where it quickly decayed to an extratropical low on the 10th of October.
Tornado Formation
Milton was associated with several intense outer rainbands wrapping around its eastern side and impacting Florida well before landfall. These rainbands led to the formation of numerous supercell thunderstorms, which in turn spawned several tornadoes. In total, 39 tornadoes formed over Florida, with the National Weather Service (NWS) issuing a daily record of 126 tornado warnings across the state. This was almost double the previous calendar day record in Florida, being 69 from Hurricane Irma in 2017. This was also the second most of any American state in one day.
Tornadoes forming in conjunction with hurricanes are not uncommon. They are observed in more than 80 per cent of hurricanes that made landfall on the coast of the Gulf of Mexico. When hurricanes approach landfall their warm, moist air is wedged under drier, cooler air sitting above land, creating a highly unstable air column. As this warm air eventually rises, it causes intense updrafts and downdrafts. Meanwhile, frictional forces between the high storm winds and the ground lead to extreme wind shear which combined with intense updraft and downdrafts can lead to a column of air rotating, producing tornadoes.
Damage
Milton brought destruction in the form of wind, storm surge, flooding, and tornadoes. These perils resulted in over 3.4 million people without power in Florida. Damage was caused to homes, businesses, sports stadiums, infrastructure, and military bases. The National Guard deployed thousands of National Guard Soldiers and Airmen to conduct relief missions. There were also significant efforts to remove the debris caused by Helene before Milton arrived to ensure that it wasn’t picked up by the hurricane and causing further damage.
A breakdown of the impact of these perils are listed below:
Wind
While Milton made landfall south of the Tampa Bay area, the unusual strong left side winds resulted in this densely populated area experiencing the fastest winds of the storm of up to 205 km/h and caused widespread damage. Homes were damaged and destroyed, trees were downed, as well as power lines. Adding further misery, the same regions that experienced the greatest winds also experienced devastating storm surge, making it hard to distinguish what caused damage to specific buildings.
Most notably, Tropicana Field, the multi-purpose stadium and home of Florida’s MLB team the Tampa Bay Rays, was damaged. Wind gusts resulted in large parts of its fiberglass roof being blown off. The roof was only designed to withstand wind of up to 185 km/h. The stadium had initially been set up to house first responders with beds arranged to accommodate 10,000 people, and was planned to serve as a temporary base camp to support debris cleanup operations. However, as the forecast changed the first responders were relocated.
The roofs were blown off several homes in Anna Maria Island and Holmes Beach, and the winds damaged several homes in Sarasota County. In downtown St. Petersburg a construction crane working on a skyscraper was blown over, collapsing into the Tampa Bay Times building. The Orlando International Airport had minor damage from a leaking roof and downed trees, and the Sarasota-Bradenton International Airport lost the entire roof of Concourse B. Tourist attractions also encountered business interruption, with theme parks such as Walt Disney World, Universal Orlando and SeaWorld closing for two days.
Storm Surge
There were fears Milton could bring record catastrophic storm tide, with warnings up to 4.5 m along Florida’s west coast and 3.6 m in Tampa Bay. Fortunately those levels never materialised.
Storm tide up to 3 m was recorded in Sarasota County. This was lower than the level caused by Helene. However, water still engulfed several low-lying homes in the area, and streets were flooded with cars washed away. In Buttonwood Harbour several homes required major repairs with the flooring and the first layer of drywall all damaged, and furniture and other contents requiring replacement.
Flooding
Milton brough over 33 cm of rainfall to parts of Florida over 48 hrs. Tampa experienced over five times the average October rainfall, in some areas the rainfall was equivalent to a 1-in-500 year event. The NWS issued several flash flood and riverine flood warnings, where around 11 million people were at risk. Multiple areas across the state experienced significant flooding including parts of Orlando, St. Johns, and throughout Hillsborough County. A week after Milton made landfall, areas such as Astor, DeLand and Sanford still had the river level at a major flood stage, with the water level receding extremely slowly. Little Wekiva River near Altamonte Springs and Shingle Creek at Campbell also exceeded the major flood stage.
The University Area in Hillsborough County experienced 30 cm of rainfall, further devastating the community already severely impacted by Helene. Homes in this county are reportedly built to a 1-in-500 year event. However, 230 homes sustained major damage and an assisted living facility needed evacuating. At Zephyrhills, the Hillsborough River crested at 0.6 m over record height, and at the river’s Morris Bridge site it crested 0.94 m above record height. Meanwhile, the MacDill Air Force Base in Tampa and Patrick Space Force Base near Cocoa Beach were closed for several days after experiencing some weather damage and flooding. The heavy rainfall also led to erosion and the formation of depressions or sinkholes across Florida, with large sinkholes occurring in both Polk and Hillsborough counties.
Figure 5. Severe flooding in Clearwater, United States. Source: Pinellas County Sheriff’s Office
Tornadoes
Milton was accompanied by 39 tornadoes, several forming before landfall. This included three incredibly rare EF3 tornadoes with 225-250 km/h peak winds which surpassed the highest wind gusts observed at landfall. Due to the way tornadoes form and their achievable peak winds, there is a lot less warning time, meaning they pose an even greater risk to human life and the built environment.
Officials stated that most of the deaths during Milton were caused by tornadoes. In St. Lucie county, there were four confirmed deaths from a tornado that impacted a retirement home, and five people were killed in tornadoes in the Spanish Lakes Country Club near Fort Pierce. Meanwhile, ten people were injured in Wellington by an EF3 tornado.
Tornadoes also left widespread streaks of destruction across Florida. They damaged and destroyed homes, mobile homes, businesses, houseboats, other motorised vehicles, and infrastructure. The NWS conducted post event surveys of some of the tornadoes detailing the extent of the damage. These included half of the roof being torn off of the Archbold COOP Station building, an EF2 at Lake Placid impacting 20-30 units including collapses due to roofs being compromised and other units being displaced by approximately one foot, boats being lifted onto the docks, multiple long trailers and trucks being overturned, vehicles moved about 100 yards from carports, paths of trees and power poles being snapped and uprooted trees, as well as several homes having siding damage, roofs ripped off, patio damage and doors and panels being buckled and dislodged.
Implications on the Insurance Industry
Hurricane Milton and Hurricane Helene, two major hurricanes, both formed around two weeks apart in a similar area. They had similar conditions and underwent similar processes, undergoing rapid intensification aided by record ocean temperatures and moist conditions and interaction with a CAG, and both struck the same area, Florida. So what implications does this have for the insurance industry?
It is believed the losses from Milton could fully deplete the 2024 natural catastrophe budgets of US property/casualty insurers. This would affect underwriting margins and earnings. As for global reinsurers, it is likely they will also feel the impact, but the losses from Milton should not overstep the sector’s annual catastrophe budgets. However, the way in which Milton affected Florida has highlighted discussions regarding multi-peril impacts and business interruption coverage.
Milton brought strong winds from the hurricane and was associated with numerous tornadoes, storm surge, flash flooding and riverine flooding. These all occurred within a two-day period as Milton crossed Florida, whilst the storm still hadn’t downgraded to a tropical low system. The riverine flooding impacting western Florida occurred in the early hours of the 10th of October. This is notable in the Australian context, with the flooding occurring within the period ending 48hrs after the hurricane was downgraded to a tropical low system.
Further complicating the multi-peril occurrence, several of the perils impacted the same locations, namely hurricane winds with flash flooding and storm surge. This is an issue for the US, especially Florida, as property policies often provide coverage only for specific causes of loss. For example, policies can include wind damage but exclude flood or water damage. This will be a contentious issue for policyholders and insurers, especially as the policyholders were required to evacuate making it difficult to record which peril caused specific damage or which peril caused the damage first. There is also overlap between the areas impacted by Milton and Helene.
The US courts in various jurisdictions have adopted different approaches to resolve these issues. Some courts have ruled towards the peril determined to be the dominant cause of damage, and coverage depends on whether that peril is covered by the policy. Different courts have ruled that when multiple perils combine to produce an indivisible loss then there is coverage as long as one of the perils was covered by the policy. Finally, other courts have ruled that the policyholder is responsible for differentiating and attributing which perils caused what damage, irrespective of which perils they are covered for.
Some insurers have incorporated anti-concurrent causation clauses in their policies. These clauses void coverage when an uncovered peril is involved in any way, whether directly or indirectly. However, whilst some courts have enforced these anti-concurrent cause clauses, others have ruled that they are unenforceable. All these factors are likely to lead to confusion and disputes between policyholders and insurers.
There is also some contention regarding business interruption coverage. Several counties were evacuated under orders from authorities. Moreover, transportation systems were interrupted during the event causing disruption to businesses. However, some policies require the government’s evacuation orders to be the result of physical damage of the type insured rather than be the result of preventive or public safety measures. Some policies also require that the physical damage must be within a certain distance of the insured location. These often result in points of contention, such as whether there must be actual physical damage, how to measure the distance between the insured location and the location of physical damage, or whether access to the insured premises was actually prohibited by the governments orders.
Another point of contention that often arises is how to measure business interruption losses when an entire geographic area has been impacted, as similar businesses can experience different impacts. Some may even profit from other similar businesses being closed. In these cases the language of the policy is important in determining whether the policyholder’s loss is only measured against its pre-catastrophe business levels, or whether consideration should be made for the operation of the business in the post-catastrophe environment.
About the author/s
Jacob Evans
Jacob has been involved in the development of our FloodAUS, CyclAUS and QuakeAUS Cat-Loss models. He specialises in data science and mathematics.
Jacob received his PhD in Condensed Matter Physics from Macquarie University. Jacob’s interests include data science, numerical modelling, physics and mathematics.
Joining Risk Frontiers in 2017, Jacob has worked across a range of projects from model development and climate risk management to resilience and portfolio modelling.
Notably, Jacob has employed techniques such as machine learning and statistical analysis to understand the vulnerability of risk across Risk Frontiers catastrophe suite, as well as applying machine learning algorithms for flood, cyclone and earthquake models. He also works on hazard and loss modelling.