The meter begins at $40 million and it will be running fast and furious in terms of how much money Hurricane Michael will cost Florida taxpayers
Gov. Rick Scott, in securing a Major Disaster Declaration from President Donald Trump Thursday in the wake of the historically vicious storm, noted in a letter to the Federal Emergency Management Agency (FEMA) that the state “has expended close to $40 million on response costs alone.”
Scott requested federal funding for 100 percent of the cost for debris removal and emergency protective measures for the first 60 days and, afterwards, a 90-percent federal cost share.
Meanwhile, the death toll from the hurricane rose to 11 overnight as five hurricane-related deaths were being reported in Virginia. Four other deaths have been recorded in Florida, and one each in Georgia and North Carolina.
Hurricane Michael, which came within 2 mph of being a Category 5 storm, came ashore near Mexico Beach on the Florida Panhandle just before 3 p.m. Wednesday before ripping into southeastern Georgia and the Carolinas.
While the storm was brutal to everything in its path, it moved quickly and did not dump the deluge of rain that has characterized many recent hurricanes. It was more reminiscent of 2004’s Hurricane Charley, the last category 4 storm to strike Florida.
Initial estimates indicate Michael’s overall economic impact may not be as severe as last September’s Hurricane Irma, which did not pack the same wind ferocity, but moved slowly and caused more widespread flooding and damage.
Irma left more than $100 billion in economic damage in Florida, according to Moody’s Analytics, although that number is still being calculated and, as it will be with Michael, could take years to put a firm figure on.
By mid-afternoon Thursday, at least six people had been reported dead in the storm’s wake, including five in Florida, where officials feared far more casualties because so few people took refuge in shelters. Most storm-related injuries and deaths do not occur during the actual event, but in its aftermath.
More than 1.1 million homes and businesses in the storm’s shredded path were without electricity Thursday, including about 388,000 in the Panhandle where the region’s two electrical utilities, Duke Energy and Gulf Power, were deploying nearly 23,000 emergency workers from 15 states.
Gulf Power warned some parts of its electrical grid may need to be rebuilt.
“In the hardest hit areas, the possibility exists that we will be rebuilding our system while we are restoring power,” Gulf Power spokesperson Jeff Rogers said. “Customers in the high impact areas could be without power for weeks.”
Meanwhile, the first raw estimates of how much of an economic hit the state’s economy will suffer beyond the $40 million already spent by the state are beginning to surface.
Scott, in his letter to FEMA, estimated the impacts to just two of the affected counties — Bay and Franklin — would “alone meet the $27 million threshold” for federal assistance.
Accuweather, citing U.S. Army Corps of Engineers’ computer models, predicted Michael's total damage and economic impact will approach $30 billion, which would make it one of the 10 costliest hurricanes in U.S. history.
A preliminary estimate by Artemis, which analyzes data on catastrophe bonds and insurance-linked securities, forecasts the damage in Florida alone would top $16 billion, although its model was based on 145 mph winds, 10 mph below Michael’s peak.
Artemis said Citizens Insurance, the state’s property insurer of “last resort,” would be among insurers “deemed most at risk of losses from Hurricane Michael’s impacts.”
Universal Insurance Holdings, FedNat Insurance, Heritage Insurance Holdings, Security First, United (UPC Insurance), Florida Peninsula, HCI, Progressive, State Farm, Tower Hill, USAA, AIG, Chubb, Allstate and Liberty Mutual could also face significant claims, according to A.M. Best, which provides financial data analysis and services for the insurance industry.
Michael was estimated to potentially cause more than $10 billion in losses for insurers, according to Wells Fargo Securities.
“Anything above $10 billion [in damage] would result in a meaningful hit to some ILS [insurance-linked securities] and collateralized reinsurance positions,” Artemis states, meaning homeowners could see higher insurance rates when renewing policies.
Although Michael will cause a statistical “blip,” Bloomberg senior economist Yelena Shulyatyeva said he “does not anticipate a sustained impact from Hurricane Michael at the national level.”
On a local level, however, it is unknown how hard the Panhandle’s tourism and real-estate sectors will suffer as peak winter season nears. The region attracts 17 million visitors a year to its beaches.
According to VISIT FLORIDA, the state's official tourism marketing corporation, last September’s Hurricane Irma — which was much larger in size and much slower, dumping far more water than the fist of fury that was Michael — “cost” the state 1.8 million fewer out-of-state visitors in 2017, resulting in a total economic loss of approximately $2.5 billion.
When the state legislature will officially assess the damage and forge policies to respond could begin after the Nov. 6 election when interim legislative committees are scheduled to stage pre-session organizing meetings in December and January.