Hurricane Milton Lessons: How You Can Adapt for the Next Storm

Hurricane Milton caused widespread destruction through Florida in early October. Yet, most losses could have been prevented with the right adaptation measures.

Streets transformed into rivers, roofs ripped off, and waves pounded walls.

Hurricane Milton came to town in Florida just days after Helene, which made landfall in late September 2024. Milton cut a swathe of damage through the Sunshine State.

Yet, most losses could have been prevented. While some businesses and institutions measure their losses and clean up after the storm, others anticipated it. They built their portfolio with resilience, learning how to adapt long before the storm surge, wind, and rain appeared.

The financial and human impact of these tropical cyclones, worsening with climate change, do not need to worsen for asset managers. Adaptation to climate risks is today more than ever an important initiative for asset managers to optimise their profits and avoid losses.

Hurricanes are nothing new to Florida - nor is hurricane damage.

After Hurricane Andrew in 1992, which led to $61 billion 2024 dollars of damage, at least eleven insurance companies went bankrupt, leaving $465 million of unpaid claims that the state ended up covering.

Projections for a direct hit on Tampa Bay are around double that cost. In 2004, four hurricanes roared across the state within six weeks producing over $45 billion of damage.

The nightmare scenario remains of a Category 5 storm slicing through Miami or Tampa, two of the most populous areas in Florida. Hurricane Andrew was a close call for the former while Milton was a close call for the latter.

Reducing Losses Through Adaptation

Long before any hurricane starts swirling, asset managers can determine the most cost-effective adaptation for properties in order to reduce damage.

Adapt, an innovative solution designed by Climate X, offers asset-by-asset assessments of adaptation options, their costs, and their return-on-investment. You can optimise your adaptation capacities, making your assets ready for any physical risk under different climate change futures.

This includes reducing losses from hurricanes - which are set to become less frequent and much stronger due to human-caused climate change.

Offices, houses, condos, shops, and critical infrastructure do not have to succumb to the wind, waves, and water. Adapt offers numerous, proactive adaptation opportunities, geared toward each local environment and architecture, including in Florida.

With Climate X and an address in Florida, you can examine the building three-dimensionally and immediately see a list of physical risks, along with the probability and accuracy of those risks reaching a certain level.

• Chronic risks are coastal flooding, subsidence, and extreme heat.

• Eight acute risks include tropical cyclones, surface flooding, and storm surge.

You might see right away that your asset expects 133 mph winds (241 km/h, Category 3 hurricane) with a probability of 1% per year at an accuracy of 65%. The numbers are calculated through rigorous back-testing, validation, and benchmarking, with extensive project documentation offering details.

Then, you choose adaptation options.

Swift calculations inform you of the costs and savings of each option to generate the return on investment.

Damaged Assets

Specific examples show how these adaptation options and the cost-benefit calculations can make a big difference to your portfolio.

One mansion in Siesta Key was on the market for $2.5 million at the time that Hurricane Milton landfalled there. Sitting on a Gulf of Mexico barrier island, but spared the full brunt of the storm by not being at the beach, this 1975-built, 2-storey, 3-bedroom, 2.5-bathroom, 2-car-garage property overlooks a small inlet and is shielded by trees.

This property might or might not have remained standing. Trees could have collapsed onto it.

Adapt shows that, for the worst climate change scenario, a capital expenditure of $12,000 today to reduce flood damage yields a 10-year savings exceeding $900,000. That is a 7,561% 10-year return on investment.

You can try different materials.

Currently, this house features a lot of stucco and glass. The foundation is slab, with the roof, both flat and gabled, being tiled. You could estimate the impact of changes to these characteristics to determine potential savings when physical risks occur. Knowing these adaptation choices is especially useful if the property needs to be rebuilt.

Another example is Tropicana Field, the home stadium for Major League Baseball’s Tampa Bay Rays, which sits in flood zones and is a designated staging area for emergency services during crises. It was built in 1990, costing over $300 million in today’s dollars. During Hurricane Milton, parts of its Teflon-coated fibreglass roof tore off, with a minimum estimated repair time of weeks.

The roof had been designed to withstand 114 mph winds (184 km/h), barely into Category 3 hurricane territory. At landfall, Hurricane Milton’s sustained winds were 6% higher, with far faster gust and tornado wind speeds.

As holes gaped in the roof, rain slashed through the grounds. Water damage is still being determined, given that the field lacks its own drainage system.

The direct cost of materials and time to repair is under assessment. If the damage had happened during the baseball season, or if the Rays had made the playoffs, then the team might have had to relocate its home games, cutting into its annual revenue which nearly matches the stadium’s building cost. Fortunately, no emergency personnel or people sheltering were in the stadium at the time of the damage.

Climate X’s Adapt can indicate the savings from different measures.

As direct adaptation for this asset, free-standing flood barriers cost around $338,000 and can save up to $14.2 million. Regional adaptations - including green infrastructure for wind control, upgraded ground water management, and coastal defences - do not cost the asset directly, but can reduce losses to under 3% of pre-adaptation losses.

Then comes the challenge of implementing these regional adaptations for asset managers or local authorities. Adapt shows the extent, far beyond Tropicana Field, to which assets around Tampa Bay could be protected.

You can toggle future scenarios in Adapt to determine in minutes the most cost-effective adaptation measure.

Based on climate change science’s consensus from the United Nations’ Intergovernmental Panel on Climate Change, you select, at your pace, from four emissions scenarios (RCPs) and four societal choices (SSPs), up to the year 2100. You also indicate whether the property is defended or undefended against the physical risks from tropical cyclones.

The results appear right away.

Future Outlook

After 1992's Hurricane Andrew, Florida looked at various ways of increasing insurance premiums, especially through the entire package of homeowner insurance.

Similar discussions are bound to happen after Milton.

Although many flooded homeowners complained that they lived in a zone where purchasing flood insurance was not mandatory, remember the US government’s message that “Every property is vulnerable to flooding”.

How long until some assets become uninsurable or impact your profits?¹

1. This post was written on 15-10-2024