Florida real estate insurance company faces bankruptcy due to Hurricane Milton | Insurance Business USA Reinsurance Florida property insurance company faces bankruptcy due to Hurricane Milton
Successive storms could put insurance companies at risk of collapse
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Written by Mav Rodriguez
Florida’s property and casualty insurance market is in crisis following the devastating landfall of Hurricane Milton, which hit the state just weeks after Hurricane Helen. Milton ranks as one of the most powerful storms of the season, and its impact could lead to significant financial strain, especially for insurance companies focused solely on Florida, AM Best warns. are.
Florida-only insurers are particularly vulnerable due to a lack of diversification. These companies are already suffering losses from Hurricane Helen, and damage from Milton could push some to the brink of bankruptcy.
In contrast, state-run insurers with portfolios spread across multiple states are better positioned to deal with the financial impact, although AM Best notes that the overall market outlook remains bleak.
Much of the damage caused by Hurricane Milton mirrors the flooding caused by Hurricane Helen. Many standard insurance policies do not include flood coverage, leaving a significant portion of losses uninsurable, further burdening the already debt-laden National Flood Insurance Program (NFIP).
Concerns about reinsurance are also growing. AM Best reports that due to the combination of losses from Helen and Milton, reinsurance rates are expected to tighten in the 2025 renewal. In particular, Florida-based insurers may have difficulty securing adequate reinsurance coverage, leading to higher homeowners’ insurance premiums and the availability of property and casualty insurance in the state. performance may decrease.
Additionally, AM Best notes that the catastrophe bond market, which started the year strong, is now under pressure. If Milton’s losses trigger bond payments, it could dampen investor appetite, impact future catastrophe bond issuances, and further complicate the insurance landscape.
The outlook for Florida’s property and casualty insurance market is grim as both Hurricane Milton and Hurricane Helen leave trails of destruction. Insurers are now having to make difficult decisions as they assess their financial position, and some may not even survive the combined impact of these two storms.
“Reinsurers are expected to be involved in losses to a much greater extent than in other recent events. This will ultimately improve relations with cedants and ensure hard real estate market conditions for several more years It may be maintained,” AM Best said.
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