The personal financial losses are a result of Ian's zeal and the fact that millions of Americans across the country have not purchased flood insurance. The National Flood Insurance Program, the dominant source of flood coverage in the United States, protects only a small percentage of homeowners, almost all of whom live in coastal areas.
As the hurricane drove storm surge onto coastal areas and triggered river overflows and flash flooding across inland Florida, where almost no one has flood insurance, Ian's web of damage was unusually widespread.
President Joe Biden declared nine counties disaster areas on Thursday, allowing residents to receive federal assistance for minor home repairs, short-term housing, and other emergency expenses.
However, according to a POLITICO E&E News analysis of government records, only 29 percent of the 1.8 million households in those nine counties have federal flood insurance.
This leaves 1.3 million households in the affected area without federal flood insurance.
Only 100 of the county's 8,000 households have federal flood insurance in Hardee County.That equates to a 1.3 percent coverage rate.
Hardee County has the lowest per capita income of any Florida county, and 44 percent of its residents are Hispanic.
"Ian has the potential to financially ruin thousands of families in Florida." "There is no other way to put it," Insurance Information Institute's Mark Friedlander said.
Flood insurance is not included in most homeowner's policies. This requires people to purchase flood insurance separately, which almost no one does who lives inland from a coastal area. The Federal Emergency Management Agency's National Flood Insurance Program sells the vast majority of flood insurance in the United States. It is unknown how many people have private flood insurance policies.
People who do not have flood insurance "could be devastated," according to Friedlander.
Problems, problems, and more problems
At the same time, the damage caused by Ian's 155 mph winds could further destabilize Florida's private insurance market, potentially forcing additional insurers into insolvency and triggering a surcharge on nearly every insurance policy in the state.
According to the Insurance Information Institute, an industry-funded research organization, Ian has caused at least $30 billion in damage. According to NOAA data, this would be the 12th most expensive disaster in the United States since 1980.
Ian struck Florida at a time when the state is experiencing an insurance crisis. Property insurance rates in Florida are among the highest in the country, and massive losses have forced six small Florida-based insurers into insolvency this year, while others have stopped writing new policies.
As a result, homeowners have been forced to turn to Citizens Property Insurance Corp., the state-backed insurer of last resort. Its policyholder base has more than doubled in the last two years, and it recently surpassed 1 million for the first time since 2014. (Climatewire, Sept. 19).
Insurer losses are the result of a combination of extensive legal claims and large payouts on policies in states like Louisiana, which has been hit by two major storms since 2020.
"Florida already has an issue with [insurance] availability." It is experiencing financial difficulties. And it has a reliability problem when insurance companies go bankrupt," said Nancy Watkins, a principal at Milliman actuarial consultants. "All three pillars of a sustainable market are in jeopardy."
Friedlander predicts that Ian-related claims will bankrupt several local insurance companies, making it even more difficult and expensive for Florida homeowners to obtain property insurance.
"Many insurers have been on the verge of bankruptcy for several years." "This could push them over the edge," Friedlander speculated.
According to the insurance institute, the average property insurance rate in Florida is $4,231 — nearly triple the national average of $1,544.
The extent to which damage was caused by wind or water is a major issue as Florida begins to recover. The question has far-reaching implications for property owners who do not have federal flood insurance and for private insurers who may face billions of dollars in wind-damage claims.
Florida Gov. Ron DeSantis (R) evaded answering whether Citizens insurance has enough money to cover Ian-related wind damage claims. Instead, he focused on the storm's damaging floods, which are typically covered by the federal government.
"We're looking at a lot of flood claims," DeSantis said, adding that Citizens should be able to pay Ian claims without levying a surcharge on its own policyholders or on all insurance policies in the state except for medical and malpractice coverage.
Watkins predicted that disputes and litigation would arise if property insurers such as Citizens denied claims because the damage was caused by flooding, which they do not cover.
"That could be a perfect storm on top of a perfect storm in a litigious environment like Florida," Watkins said.
According to the Florida Office of Insurance Regulation, insurance companies denied roughly 30% of the nearly 1 million claims filed in the aftermath of Hurricane Irma in 2017.
In 2016, the denial rate for Hurricane Matthew in Florida was approximately 40%.
Citizens has $13.6 billion in reserves and expects to pay 225,000 claims from Ian totaling $3.8 billion.
Higher temperatures mean more inland flooding.
The good news for Florida is that it has more federal flood insurance policies than any other state, accounting for approximately 20% of all households. Only Louisiana has a higher percentage. Only about 4% of properties in the United States are covered by FEMA's flood insurance program.
The bad news is that flood coverage varies greatly across Florida, particularly in the counties hardest hit by Ian.
Flood damage coverage rates range from 1.3 percent in Hardee County and 3.2 percent in DeSoto County to 67 percent in Collier County, which is located in the state's southwest corner and is one of Florida's richest counties.
"There will be a lot of people without flood insurance," said Carolyn Kousky, an expert on flood insurance and the Environmental Defense Fund's associate vice president for economics and policy. "Without insurance, economic recovery from these events is extremely difficult."
Some areas of Florida experienced severe flooding but were not among the nine counties declared disasters by Biden.
According to the National Weather Service, Orlando, Florida's third-largest city, received up to 15 inches of rain and experienced flash floods. There are 130,000 people living in the city.
Despite this, only 2,039 buildings are covered by federal flood insurance, according to records.
This equates to a coverage rate of 1.5 percent.
The inland flooding caused by Ian "highlights the fact that as climate change changes storm patterns, we're seeing a lot of flooding away from the coasts from stalled hurricanes and intense precipitation," according to Kousky. "A large number of areas are at risk of flooding."
People who do not have flood insurance will have to rely on FEMA assistance, which has a cap of $72,000 but typically results in payments of less than $10,000.
When flash flooding devastated eastern Kentucky in July and August, only about 2% of the flooded households had flood insurance (Climatewire, Aug. 9).
FEMA has provided $73 million in disaster assistance to 7,800 Kentucky residents, an average of $9,350 per person.