Best’s Commentary: Florida Losses from Hurricane Idalia Are Unlikely to Match Hurricane Ian’s

Insured losses in Florida related to Hurricane Idalia are unlikely to surpass those from Hurricane Ian last year given the storm’s path across the more sparsely populated Big Bend region, which has lower insured values than other coastal areas, according to a new AM Best special report.

Source: AM Best | Published on September 5, 2023

Hurricane insurance claims

Insured losses in Florida related to Hurricane Idalia are unlikely to surpass those from Hurricane Ian last year given the storm’s path across the more sparsely populated Big Bend region, which has lower insured values than other coastal areas, according to a new AM Best special report.

Hurricane Idalia appears to be an earnings event for insurers. However, it follows above average catastrophe losses in first half of 2023, mainly due to severe convective storms and secondary perils. As a result, property insurers’ underwriting results for 2023 will be under pressure, according to the report.

The recent storm arrived with Florida’s property insurance market already contending with several challenges and growing more concentrated. The top 15 property insurers generated 60% of direct premiums written last year, which increased by 2% in the past two years. Citizens Property Insurance Corp., which is considered a state-backed insurer of last resort for state residents, has led the way in this regard, quadrupling its premium in just three years to reach $3.2 billion in 2022.

The report also notes that while premium ceded to non-U.S. captives from an AM Best composite of Florida-concentrated personal property insurers decreased in 2022, that was mainly due to one company. Some of these companies actually increased their use of this strategy. The use of captives may be attributed to insurers trying to fill in gaps with reinsurance protection in the traditional reinsurance market. Nonetheless, ceded leverage remains elevated along with an element of credit risk. The Florida concentrated insurers’ composite generates 37% of the state’s property insurance premium and now stands to capture more market share.

“Because of the significant losses in Florida in recent years, some reinsurers have been re-evaluating their aggregate exposures and capital allocation targets there,” said Jason Hopper, associate director, AM Best. “The losses paid by U.S. reinsurers as a share of premiums assumed from Florida personal property specialists continued to rise in 2022.”

There was also a rise in the average pricing of flood policies provided through the National Flood Insurance Program, which has generated notable growth for the private flood insurance market in Florida. The number of policies increased 30% in 2022 compared with the prior year, with five companies accounting for 95% of that.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=335289 .

A video discussion of this report also is available at http://www.ambest.com/v.asp?v=ambidalia823&AltSrc=182 .