Hurricane Idalia leaving its mark on Florida’s property insurance industry

by | Sep 8, 2023

  • Hurricane Idalia’s landfall near Keaton Beach is posing significant challenges for Florida’s property insurance industry.
  • Estimated insured losses range between $3 billion and $5 billion for the private sector and a $500 million hit for the National Flood Insurance Program.
  • Florida’s property insurance industry is already grappling with ongoing issues, leading insurers to advocate for more reforms on top of recent legislation to address the crisis and create a more sustainable market.

New data after Hurricane Idalia made landfall on Aug. 30 near Keaton Beach, is presenting a challenging picture for Florida’s property insurance industry. The economic toll of the storm is still unfolding, but estimates suggest it could further stress an insurance sector already grappling with elevated costs and policy uncertainties.

According to a report from Moody’s Analytics, the private sector could see insured losses ranging between $3 billion and $5 billion, while the federal National Flood Insurance Program could take a $500 million hit. Meanwhile, data on the Florida Office of Insurance Regulation website shows that already, $120.7 million in estimated insured losses have been claimed on 14,244 separate claims cases filed as of Wednesday, up from $97.7 million in losses and 12,308 claims on Tuesday.

In light of the property insurance industry’s ongoing challenges, insurers are pushing for more swift changes on top of the sweeping legislation passed earlier this year. Florida’s previous property insurance regulatory framework was originally crafted to safeguard customers, but industry analysts say the pendulum swung too far and that framework let consumers down by cratering the market. They also say more reforms are needed to set appropriate premium rates to thwart the ongoing crisis.

Recent legislation has attempted to address some of these challenges. Last December, lawmakers passed Senate Bill 2-A, aimed at reducing excessive litigation that has been driving up insurance costs. The bill also adjusted the eligibility requirements for Citizens Property Insurance Corp., a state-run insurer that serves as a fallback option but is one of the state’s most expensive options. Citizens has been accumulating policies at a significant rate, moving from 499,056 policies in August 2020 to nearly 1.38 million policies as of last Friday.

Insurance Commissioner Michael Yaworsky recently approved proposals allowing seven private insurers to assume as many as 202,000 policies from Citizens, part of a longstanding effort to move policies into the private sector. This could be a double-edged sword for consumers, who may end up paying more for coverage, especially given a change in December legislation that mandates Citizens’ customers to accept offers from private insurers if the cost is within 20% of Citizens’ premiums.

While the economic losses from Hurricane Idalia are projected to be around $20 billion in total, the storm’s impact on Florida’s insurance industry could have far-reaching consequences. It may serve as an impetus for systemic change as the industry and lawmakers strive to create a more sustainable and resilient market.


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