Hurricane Ian Will Significantly Impact Wind-Exposed States: MarketScout

Following Hurricane Ian, MarketScout CEO Richard Kerr stated that the storm loss event will have "significant" implications for property rates in Florida and other wind-prone states in the United States.

Source: Artemis | Published on October 6, 2022

coastal areas

According to MarketScout's analysis of commercial insurance market rates during the third quarter of 2022, property rates in coastal areas are now expected to rise following hurricane Ian.

Commercial property was already the fastest-rising area of P&C insurance rates in the third quarter of 2022.

In Q3 2022, commercial property rates increased by 7.67%, while MarketScout's commercial lines composite increased by 5.28%.

However, it appears that Hurricane Ian will accelerate the rate of insurance rate increases.

This will be triggered by loss hit carriers looking to recover earnings, as well as an increased level of risk awareness among those writing coastal property risks as another truly catastrophic loss event ripples through the system.

Furthermore, higher reinsurance costs are unavoidable, increasing the pressure on primary property insurance rates to rise as well.

Sources have been asking whether Florida's coastal areas are becoming uninsurable, at least for older stock properties and anything that hasn't been hurricane-hardened.

This appears to be reflected in renewal prices for primary homeowner and commercial insurance.

“Losses from Hurricane Ian will significantly impact rates in Florida and other wind- exposed coastal states,” Kerr explained on commercial rates.

Moving on to homeowners insurance rates in the United States, rates for homes worth less than $1 million increased by 4% in Q3 2022, while rates for homes worth more than $1 million increased by 6%.

“High-value homes are experiencing more aggressive rate increases,” noted Kerr. “This is largely because, on a composite national basis, more high-value homes are located in catastrophe-prone areas of the US which naturally are assessed higher rates.”

Turning back to the recent catastrophe, Kerr said on homeowners business, “Hurricane Ian is going to be a huge loss for insurers covering properties in Florida. Excluding coverage for flood and storm surge, estimates are from $25 to $45 billion. Including flood claims, the total will most likely surpass $100 billion.

“Rates will be up dramatically in Florida for the foreseeable future.”