Hurricane Ian claims could topple Florida home insurance market: analysts
After churning its destructive path through Florida, Hurricane Ian could do fatal damage to the state’s home-insurance market — posing a potential political headache to Republican Gov. Ron DeSantis.
Long before the storm, Florida’s property insurance system was a mess. Hundreds of thousands of Florida homeowners lost their private insurance policies over the last two years, after a dozen companies left the market in the face of billion-dollar annual losses, including several that went under.
Now, the damage wrought by Ian may be the industry’s breaking point in the state.
More than a million Florida homeowners have been forced to turn to Citizens Property Insurance, the state’s publicly funded “insurer of last resort” — meaning that state taxpayers could be on the hook for billions of dollars’ worth of hurricane damage. Early estimates say the storm caused at least $63 billion in damage to privately insured property alone, not including flood damage covered by the National Flood Insurance Program, which provides most flood policies.
Annual premiums already cost Florida homeowners $4,200 on average, triple the national average rate.
The long-brewing crisis has turned home insurance into a campaign issue for Democrat Charlie Crist, DeSantis’s challenger in November’s gubernatorial election, who on Monday called the incumbent “the worst property insurance governor in Florida history, period.”
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Florida’s geography, which regularly puts it in the path of severe storms, contributes to its insurance woes. But its unusually high rates of litigation worsen the situation, state officials say.
A lawyer-friendly environment means that Florida sees 79% of the nation’s homeowners’ insurance lawsuits, the Financial Times reported — but only 9% of all claims.
“With Ian, especially if this storm leads to litigation, it makes me wonder if the market can sustain this,” said Nancy Watkins of Milliman, an international actuarial consulting firm.
DeSantis, who convened a special legislative session in May to address the insurance problem, acknowledged that the resulting short-term fix — a $2 billion reinsurance backstop for Citizens Property Insurance — is far from enough.
“This is a problem that we’re going to continue to tackle,” DeSantis said Monday, hours before the hurricane hit. “Clearly, there’s other things legislatively that I’d like to see done.
“But if you’re asking would I rather not have had a storm hit us, then the answer is yes.”