Florida’s Already Fragile Property Insurance Market to Incur Billions in Losses Post Ian

Hurricane Ian could be among the costliest in US history.

Source: Quartz | Published on September 29, 2022

Louisiana hurricanes

According to Chuck Watson of Enki Research, the massive storm tearing through parts of Florida at 150 mph is expected to cause $30 billion to $60 billion in damages and economic losses.

The insurance industry is looking at a loss of $20 billion at the very least, according to Artemis, a catastrophe bond and insurance-linked securities analysis firm. At the higher end, it could be $40 billion.

Hurricane Ian made landfall in Florida in the same spot, around the same time, and with similar wind speeds as hurricane Charley in 2004.

But the damage from Ian is poised to be way worse.

The slower speed on land means Ian will have more time to crawl across the state, exacerbating the damage to infrastructure, power lines, and homes caused by wind, rain, and flooding.

Florida’s faltering property insurance industry, by the digits

$258.3 billion: The reconstruction cost value of at least a million homes along the Florida Gulf Coast at risk of storm surge damage

12+: Private insurers that have gone out of business since January 2020, plus six that have been declared insolvent since the start of the year (litigation and fraud are both to blame) (litigation and fraud are both to blame)

$16.2 billion: State-backed reinsurer’s Florida Hurricane Catastrophe Fund (FHCF, or Cat Fund) liquid resources (plus an estimated bonding capacity of $8 billion

$2 billion: State funds committed to support insurers facing high reinsurance rates

The state insurer will be able to weather the storm.

In the last couple of years, homeowners have been flocking to state-owned insurer, Citizens Property Insurance Corp (CPIC), as a last resort. The non-profit alternative insurer established by the state legislature in 2002 for Floridians unable to find coverage through private insurers is being inundated with requests.

The state-run insurer has more than $6 billion in surplus. Early modelling of the storm suggests it could see 225,000 claims worth $3.8 billion in losses.

“They feel very strongly that they’re going to be able to handle this and still have pretty significant reserves,” governor Ron DeSantis told reporters at the state’s Emergency Operations Center in Tallahassee on Wednesday (Sept. 28).

Plus, an emergency order issued by insurance commissioner David Altmaier on Wednesday temporarily prevents property insurers from dropping customers for at least two months in the aftermath of Hurricane Ian.

However, not all hurricane-related damages are covered. The storm is expected to dump nearly a foot of rain on central Florida. A typical home insurance policies—including CPIC’s—does not include flood coverage.

I'm unable to return home.

While millions have been evacuated from their homes, thousands more are unable to reach shore. About 20,000 cruisers are stuck at sea for the next two days as three major Florida ports closed because of the hurricane.