Floridians already pay some of the highest homeowners insurance premiums in the nation, and the state’s top politicians say they’ve taken steps to fix it, but a rash of major hurricanes has wiped out that progress. It’s possible.
Hurricane Milton hit the state late Wednesday near Sarasota, sending hurricane-force winds across the Florida peninsula and into the Atlantic Ocean.
There were concerns that the Tampa Bay area, a low-lying area susceptible to storm surge, would be hit hard by the storm. That didn’t happen and the state avoided a “worst-case scenario,” according to Gov. Ron DeSantis.
Still, the damage could reach into the billions. And that could have a knock-on effect on how much residents ultimately pay. This is the third hurricane to make landfall in Florida this year, and the storm season doesn’t end until November 30th.
Ratings agency Moody’s warned in a report released Thursday, shortly after the Milton incident, that “homeowner interest rates are likely to continue rising as insurers seek to match prices to increased risk.” .
Insurance rating agency AM Best issued comments ahead of the storm’s landfall, saying the damage could prompt reinsurers, which provide backup financial support to insurers, to maintain existing price levels. he warned. Reinsurance costs are a major expense for insurance companies.
Profits may evaporate
The analysis suggests that some insurers, especially those operating only in Florida, could be in trouble and that state leaders have been touting more manageable premiums in recent months. He warned that any signs of progress toward this goal could disappear.
“Difficult conditions in the reinsurance market, potential local bankruptcies, and reduced capital for Florida-focused insurance companies will put significant pressure on Florida’s real estate market,” AM Best reported.
But Mr. DeSantis on Thursday again walked back some of his initial damage projections, particularly Wall Street analysts who had suggested insured losses from Hurricane Milton could be more than $50 billion. did.
“How could Wall Street analysts know that? It’s been pitch black all day,” DeSantis said at a morning news conference. “I mean, let’s give this thing a break.”
Even before Milton, Hurricane Helen hit Florida two weeks ago and has since swept through the Southeast, causing about $1.2 billion in insured losses in Florida so far, according to the state Office of Insurance Regulation (OIR). occurred. More than 12,500 insurance claims related to Helen have been filed with Citizens Property Insurance Corp., the last government-backed insurer.
On Friday, OIR reported that Milton was left with at least $586 million in insured losses after the incident.
A Citizens spokesperson said Friday that the company has already received nearly 12,000 claims related to Hurricane Milton. That number is expected to rise significantly as evacuees return to their homes and assess the damage.
Although citizens remained in the financial surplus heading into hurricane season, the Tampa Bay area was at significant risk. If the company depletes its reserves, it could impose surcharges on a wide range of private insurance policies, including auto insurance, potentially increasing payouts for all Florida policyholders.
Florida’s insurance market has suffered due to an increase in the number of storms hitting the state over the past eight years (after a decade without hurricane damage) and the cost to companies defending policyholder lawsuits. , has been unstable for many years. Some insurance companies raised interest rates, while others filed for bankruptcy or left the state.
Mr. DeSantis and Republicans in charge of Congress responded in late 2022 by severely restricting lawsuits against insurance companies. Although it doesn’t require insurance companies to lower premiums, state officials say the law encourages new companies to come to Florida. They also note that many companies did not call for a rate hike in 2024.
Just hours after Hurricane Milton hit the state, Insurance Secretary Michael Jaworski insisted the market was improving, and after a meeting with governors and company representatives this week, one company, USAA He pledged to continue investing in. .
The trend “demonstrates continued strength in Florida’s property and casualty insurance market, which goes against the narrative that has been circulating about our industry in recent months,” Jaworski said.
OIR did not directly answer whether the meeting between DeSantis, Jaworski, and USAA representatives took place before or after Milton’s landfall.
“OIR maintains an open dialogue with all insurance carriers in Florida. Discussions with USAA began before Hurricanes Helen and Milton and continue today as we support our members’ recovery efforts. “OIR spokesperson Shiloh Elliott said.
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Republished with permission from Florida Phoenix.
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