Hurricane impacts and Florida's construction market
Supply chain issues from the pandemic and two major hurricanes just weeks apart have affected the rebuilding efforts across much of Florida.
Residents of Florida were hit by two major hurricanes over a very short period this fall as Hurricane Ian caused an estimated $50-$70 billion in insured losses in late September, followed by Hurricane Nicole, which traveled a similar path in early November and caused almost a half a billion dollars in losses.
Before the hurricanes, supply chain issues affected construction across the country. However, the storms exacerbated those issues in Florida, affecting labor, lumber, concrete, plumbing and electrical supplies, to name a few factors. A recent report from CoreLogic found that costs for some supplies like lumber and plywood have leveled off or begun to drop, while prices for other construction products are still increasing.
In the latest Insurance Speak podcast, Kevin Libeg, vice president of middle market construction at Argo Construction, shares some insights on these issues and explains their impact on the insurance industry.
Ninety-eight percent of the zip codes affected by Hurricane Ian were also impacted by Hurricane Nicole just a few weeks later. Libeg says the hurricanes complicated a problematic situation in the construction market in Florida. There is a housing shortage driven by an estimated 1,000 people a day moving into the state, and 800,000 homes experienced hurricane-force winds from a category 4 hurricane. “There is a tight labor market with a shortage of skilled workers throughout the state,” he adds. The result is massive delays on projects.
Contractors are having a difficult time getting their hands on supplies such as windows, drywall, components for HVAC systems, and wood products such as doors, and transformers in a timely manner. “Transformers are a critical component to the electrical grid that were damaged by these storms and there was already a shortage of transformers due to COVID,” Libeg explains.
The federal government and the state of Florida have earmarked funds to aid the rebuilding process, but the shortage of supplies and workers will still have a long-term effect on rebuilding costs and timeframes.
To hear more on the factors affecting insurers and policyholders, listen to the podcast above or subscribe to Insurance Speak on Spotify, Apple Music or Libsyn.
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