not calm before the storm

Hurricane Ian tests Florida's struggling insurance industry

The catastrophe will cost the insurance industry $20 billion at the very least, and $40 billion at the higher end.
Hoping the homes hold up.
Hoping the homes hold up.
Photo: Joe Raedle (Getty Images)
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Hurricane Ian could be among the costliest in US history.

The massive storm tearing through parts of Florida at 150 mph is poised to cause between $30 billion and $60 billion worth of damages and economic losses, Chuck Watson of Enki Research estimates.

The insurance industry is looking at a loss of $20 billion at the very least, according to Artemis, a catastrophe bond and insurance-linked securities analysis firm. At the higher end, it could be $40 billion.

Why Hurricane Ian will hurt more than Hurricane Charley

Hurricane Ian made landfall in Florida in the same spot, around the same time, with matching wind speeds, as hurricane Charley in 2004.

But the damage from Ian is poised to be way worse.

The slower speed on land means Ian will have more time to crawl across the state, exacerbating the damage from wind, rain and flooding to infrastructure, power lines and homes.

Florida’s faltering property insurance industry, by the digits

$258.3 billion: The reconstruction cost value of at least a million homes along the Florida Gulf Coast at risk of storm surge damage

12+: Private insurers that have gone out of business since January 2020, plus six that have been declared insolvent since the start of the year (litigation and fraud are both to blame)

$16.2 billion: State-backed reinsurer Florida Hurricane Catastrophe Fund’s (FHCF, or Cat Fund) liquid resources (plus an estimated bonding capacity of $8 billion)

$2 billion: State funds committed to support insurers facing high reinsurance rates

The state insurer can weather the storm

In the last couple of years, homeowners have been flocking to state-owned insurer, Citizens Property Insurance Corp (CPIC), as a last resort. The not-for-profit alternative insurer created by the state legislature in 2002 for Floridians unable to find coverage from private insurers is getting flooded with requests.

The state-run insurer has more than $6 billion in surplus. Early modelling of the storm suggests it could see 225,000 claims worth $3.8 billion in losses.

“They feel very strongly that they’re going to be able to handle this and still have pretty significant reserves,” governor Ron DeSantis told reporters at the state’s Emergency Operations Center in Tallahassee on Wednesday (Sept. 28).

Plus, an emergency order issued by insurance commissioner David Altmaier on Wednesday temporarily prevents property insurers from dropping customers for at least two months in the aftermath of Hurricane Ian.

But not all hurricane-related damages are covered. The storm is going to drop almost a foot of rain over central Florida. A typical home insurance policy—including CPIC’s—does not include flood coverage.

Can’t come home

While millions have been evacuated from their homes, thousands more can’t make it ashore. About 20,000 cruisers are stuck at sea for the next two days as three major Florida ports closed because of the hurricane.

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