Insurance companies operating in Florida are facing significant challenges in the aftermath of two powerful hurricanes, Helen and Milton.
What happened: After Hurricane Helen, losses for private insurance companies were estimated at $3 billion to $6 billion. Hurricane Milton, which is expected to make landfall on the Florida Gulf Coast near Tampa on Wednesday, is putting additional strain on Florida’s insurance market.
High claims, soaring premiums and insurance company exodus are already hurting customers. The approach of Hurricane Milton could further destabilize the market.
The average annual premium for homeowners insurance in Florida jumped to $10,996, the highest in the nation.
Insurify predicts this number will increase by another 7% in 2024, to an average of $11,759. This number is nearly four times the national average and is driven by multiple factors, including increased frequency and intensity of hurricanes, rising costs of building materials, and reinsurance issues.
The situation is even worse in Florida, where a significant number of insurance companies are leaving the state.
SEE ALSO: Hurricane Helen exposes vulnerabilities in Florida’s home insurance market
Stocks to watch: Ongoing hurricane activity in Florida is expected to impact several large publicly traded insurance companies.
The main insurance companies facing challenges are:
Allstate Corporation All Travelers Companies, Inc. TRV Progressive Corporation PGR State Farm STFGX
Citizens Property Insurance Corp. has more than 1.4 million policies, but the premiums are much higher, averaging $21,707 per year. Click Orlando, dubbed Florida’s last insurance company, has transferred more than 648,000 policies to private insurers.
These companies are facing significant financial strain due to increased claims, which will likely lead to higher premiums and reduced coverage. Smaller regional insurance companies operating in Florida may also face additional pressure to go bankrupt or exit the market.
Why it matters: Several of Florida’s largest insurance companies denied nearly half of homeowners’ insurance claims in 2023, according to Insurance Business Magazine, citing data from Wyeth Ratings. .
These carriers include:
Castle Key Indemnity Co. denied 47.1% of claims and Castle Key Insurance Company 46%. State Farm Florida Insurance Company, 46.4% denied
Coverage is often denied to save cash and avoid bankruptcy.
How we got here: While it’s difficult to directly attribute a single hurricane to climate change, many scientists say climate change is worsening the frequency of extreme weather events.
As ocean temperatures rise due to global warming, there is more energy for storms, making hurricanes like Helen and Milton more powerful.
Rising sea levels also cause more severe storm surges. In addition, changes in weather patterns could slow down storms, leading to more rainfall and longer-lasting damage in affected areas. Overall, climate change is contributing to increased storm intensity.
Florida Governor Ron DeSantis has declared a state of emergency for 51 Florida counties. So far, he has generally avoided directly linking Florida’s intensifying hurricanes to climate change.
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Photo: Massive destruction of Fort Myers Beach after Hurricane Ian in 2022, Photography by Felix Mizioznikov, Shutterstock
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