Florida’s already stressed insurance market is still reeling from the damage caused by Hurricane Helen and will face additional pressure from Hurricane Milton, which hits the state.
Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple I), told Barron’s that Hurricane Milton will be even more stressful for insurance companies than Helen.
Based on current projections, Friedlander said Milton could cause “far more severe wind damage” than the previous three hurricanes that made landfall in Florida combined: Idalia in 2023 and Debbie and Helen this year. said that it was high.
Wind damage is generally covered by property insurance, while flood damage is covered by flood insurance.
Florida homeowners already pay some of the highest insurance premiums in the nation. Homeowners in the state paid an average of $11,163 in annual insurance premiums as of July 2024, according to data shared with Newsweek by virtual insurance company Insurify. At that time, the national average premium was $2,435 per year.
These insurance premiums are rising in part because of Florida’s increased risk of natural disasters.
Damaged homes in areas affected by Hurricane Helen on October 3, 2024 in Keaton Beach, Florida. Florida’s insurance market is currently bracing for additional pressure from Hurricane Milton, which is barreling toward the state. Damaged homes in areas affected by Hurricane Helen on October 3, 2024 in Keaton Beach, Florida. Florida’s insurance market is currently bracing for additional pressure from Hurricane Milton, which is barreling toward the state. Mandel NGAN/AFP via Getty Images
The extent of the damage caused by Helen is still unknown, and estimates of insured losses vary widely.
Friedlander said that despite Helen being a Category 4 hurricane, it was a “moderate loss event” for Florida home insurers, with estimated losses of $1 billion to $2 billion.
He said much of Helen’s damage was caused by storm surge and river flooding, not wind. This poses a problem for homeowners, as more than 95% of homes in the path of Hurricane Helen do not have flood insurance, according to the Wall Street Journal.
Other estimates indicate that Helen caused more property damage. John Neal, CEO of insurance market Lloyd’s of London, told the Wall Street Journal that insurance losses would likely be in the range of $5 billion to $15 billion.
The lines of what is classified as flood or wind damage are not always clear-cut, and disagreements between homeowners and insurance can lead to legal disputes.
In recent years, insurance companies have reduced coverage, raised deductibles and tightened policy terms to compensate for increased financial pressure from natural disasters and rising underwriting losses. Homeowners filing insurance claims following incidents may also face challenges.
With higher deductibles for things like wind damage, homeowners with minor damages may find they are not covered.
Two natural disasters in quick succession are sure to put additional pressure on Florida’s already fragile insurance market.
“Hurricane Milton will put additional stress on insurance carrier claims teams that may already be taxed by the effects of Helen,” said Insurify’s vice president of carrier management and operations. President Betsy Stella told Newsweek.
He added: “Insurance companies want to set premiums that are commensurate with the risks this season. But it will be some time before we know whether that is the case. What we do know “This means that the market will be affected by higher prices for replacement materials,” he added. , as well as storm-chasing contractors and fraud, all of which can drive up the cost of a claim and potentially increase your premiums in the future. ”
Friedlander is less pessimistic. He told Newsweek that Florida’s property and casualty insurance industry is “well positioned to serve as a financial first responder” to customers affected by Hurricane Milton this week.
“The market is in its best financial position in years, thanks to state law changes in 2022 and 2023 that address the human factors that caused the Florida Risks crisis: abuse of the legal system and insurance claims fraud,” he said. ” he said.
“Milton is expected to make landfall as a major hurricane, but it is too early to tell what economic damage it will cause,” Erin Collins, senior vice president of affairs and policy at the National Association of Mutual Insurance Companies, told Newsweek. Following Helen, new damage could put further stress on the region’s repair market.
“States like Florida can face multiple hurricanes in a single season, and many of our coastal regions continue to grow, highlighting the urgency of strengthening the state’s insurance market. It is.”
Insurers are likely to face a flood of claims, and homeowners may find their insurance coverage inadequate or face further premium increases in the future. It remains to be seen how the market will react to the double blow of the hurricane.
