Even though the one-two punch of hurricanes Helene and Milton caused immense, widespread damage and killed hundreds of people, it won’t be a disaster for the state’s insurance industry, according to early assessments.
However, homeowners will not know how or if those storms affect their rates until next year.
Property insurance industry representatives say both storms’ losses are “manageable events” for the companies that fortify Florida properties against hurricane damage. That’s despite the state’s insurance market’s wobbly condition after another monster storm, Hurricane Ian, in 2022.
Even though Milton, like Ian, carved a swath of damage across the state’s midsection, from coast to coast, some factors will keep Milton’s losses from straining the state’s property insurance companies’ ability to meet the expected crush of claims, one industry representative said. A top state insurance regulator appears to concur. And that’s despite a report from Fitch Ratings, an insurance analysis firm, that said Milton’s toll will further weaken the state’s insurance market’s “precarious position.”
The same day as the Fitch report — and less than 24 hours after Milton’s landfall — Florida Insurance Commissioner Michael Yaworsky’s office put out a news release highlighting the “continued strengthening” of Florida’s property insurance market by pointing out that national insurance carrier USAA reaffirmed its commitment to investing in its Florida presence.
“These announcements … point to continued strengthening of Florida’s property insurance market,” Yaworksy said.
Still, the state’s property owners — already paying about two or three times more for insurance than any other state — should be wary, or maybe budget for next year: Another spike in next year’s property insurance premiums because of the hurricanes’ destruction, particularly from Milton, can’t be ruled out, at least until the global money markets have their say, according to an insurance industry official.
This year’s conga line of storms could be a factor in driving up the prices that insurers must pay when they try to fortify themselves against the mass of claims that come in after catastrophic losses through the global reinsurance markets, according to Mark Friedlander, director of corporate communications for the industry-funded Insurance Industry Institute (III).
“Much is dependent on the 2025 pricing decisions by the global reinsurance market,” Friedlander said on what the storms might mean for premiums.
Reason for optimism earlier this year
Reinsurance brokers Aon and Gallagher Re said this year that Florida property insurers found better prices and more availability when buying reinsurance coverage to backstop Florida policies that were effective this year. This came after several years of hefty prices for the backup assets to be tapped in the event of a catastrophe. More favorable markets and the state’s changes to tort law were credited with keeping the average homeowners’ premium to a 2% average increase over last year. Also, a July 1 report, based on the first quarter of 2024, was the first time in seven years Florida insurers showed an overall profit.
Citizens Property Corp., at its July meeting, reported that prices on the global reinsurance market were down by 7.9% from last year amid optimism about legal reforms to tamp down lawsuits against insurers. The state’s insurer of last resort, which insures more property than any other, attributed its average 14% increase in premiums for this year to wanting to encourage more customers to seek coverage through the for-profit, commercial market.
Last year also had only one hurricane making landfall in Florida: Idalia hit the sparsely populated Big Bend area as a Category 4 storm.
Fortuitous wobble prevents ‘black swan’ event
Still, a calamitous crush of claims on the state’s insurance carriers was averted when Milton’s march to Florida took a slight turn, III’s Friedlander explained.
It was not the catastrophe for Tampa Bay that was anticipated as it churned at Category 5 strength in the Gulf of Mexico days before landfall. It ended up weakening before landfall to a Category 3.
“While Hurricane Milton has caused significant property damage throughout Florida, it does not appear to be at the level that was projected due to a reduction in its intensity before landfall and not making a direct hit on Metro Tampa,” Friedlander said.
Flooding damage may spare private insurance
Also, similar to Helene and Hurricane Debby, a Category 1 that hit the Big Bend area in early August, a significant amount of Milton’s damage involves flooding. While homeowner insurance protects homeowners from storm damage, fire, theft and water damage that involves a sudden leak, or an opening in the structure caused by wind, flood insurance is bought separately and mostly through the Federal Emergency Management Agency. It is not counted among the insured losses.
Friedlander’s estimation seems to be borne by other ratings and reinsurance markets’ estimates. They show insured property losses from Milton won’t climb as high as Ian. Fitch, for example, estimated Milton’s insured losses would come in around $30 to $50 billion, compared to Ian’s $60 billion in insured losses.
A spokesman for Citizens said that the nonprofit company has the financial strength to withstand the damage nature’s fury inflicted over the past two weeks. Citizens should be able to do it without tapping into an assessment against all insurance policyholders that it’s statutorily entitled to do if claims exceed its assets, a company official said.
“We’re in a strong financial position,” said Michael Peltier, Citizens’ spokesman. “We’re going to be able to take care of our policyholders without having to levy an assessment.”
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com. Help support our journalism. Subscribe today.
This story was updated to add a video.
