FLOIR claims data for hurricane Ian already indicates $12bn+ costs

The Florida Office of Insurance Regulation (OIR) is already reporting data on claims filed after hurricane Ian and the initial cut of numbers suggests a bill of over $12 billion is possible just from the claims filed to-date.

Right now, the Florida Office of Insurance Regulation (OIR) reports 375,293 claims have been filed after Ian, a very high total in such a short period of time since the storm struck.

Residential property claims are the main source at 273,939 claims and within that bracket homeowners, with over 222,000 claims filed already.

As of October 6th, the FLOIR is estimating insured losses from hurricane Ian, based on claims filed, at just under $3.28 billion.

While that’s helpful, it’s much more interesting to look at the potential costs that could come from these initial wave of claims.

Even more interesting is applying an expectation for inflation to those claims, resulting in higher costs. Here’s an unscientific look at that.

Hurricane Irma from 2017 is the nearest Florida landfalling significant hurricane to compare Ian’s claims data with.

Hurricane Irma made landfall in Florida on September 10th 2017 and by September 20th the FLOIR was already reporting over 372,000 claims filed.

So, that’s a relatively similar initial influx of claims to hurricane Ian, at over 375,000 claims filed within ten days of the landfall on the west coast of Florida.

But, the FLOIR reported on Irma that the initial insured loss estimate from those roughly 372,000 claims was just under $2.17 billion, so much lower than its initial insured loss estimate for hurricane Ian.

A lot of factors could play into this increase, but inflation is certainly one of them.

In basic terms, the average inflation rate of a dollar from 2017 to 2022 was roughly 3.86% per year, giving a cumulative price increase of 20.83%.

Of course that doesn’t account for all inflationary factors, such as labour costs and the like, while supply-chain effects have significantly ramped up some materials in price, as well.

So, that’s the first interesting comparison, the estimate of Irma’s insured loss after ten days versus Ian, with a similar amount of claims filed.

If we then look at the total cost of hurricane Irma, the FLOIR’s insured loss estimate was just over $20.67 billion. Its estimates are always a good deal lower than the main industry loss estimates used, as they are Florida specific and don’t encompass every underwriters figures either, just those reporting to it.

But that insured loss total for hurricane Irma, as well as the fact the FLOIR reported 729,786 claims were closed with a payment after Irma, can give us an average claims cost of a rough $28,330.

So, if that $28,330 was an average claim cost for 2017’s Irma and we load just a basic 21% for dollar inflation, it gets us to $33,996 as per-claim benchmark (remembering this is not including all inflationary effects over the five years, just dollar value inflation).

Then take the reported claims number from the FLOIR for hurricane Ian, of 375,293 along with that inflation adjusted average claims cost from Irma and we’re already up to almost $12.76 billion.

Yes, some of those claims won’t result in a payout, maybe enough to take the total down to $10 billion, or a little lower.

But, with the number of claims to be filed after hurricane Ian set to likely more than quadruple, if hurricane Irma was anything to go by as it reached over 1.125 million claims, the total is set to increase significantly.

Finally, in this unscientific look at hurricane Ian’s claims so far, if the total gets to Irma levels of almost 730,000 claims closed with payment from the storm, using the inflation adjusted average claims cost would give you an industry insured loss, FLOIR reported, of almost $25 billion, so 25% higher than hurricane Irma.

Something to consider, as inflation could make a huge difference with hurricane Ian, compared to Irma. Five years may not seem like a long time, but in claims cost terms there could be a gulf between the storms (all dependent on litigation, of course).

Read all of our coverage of hurricane Ian, and our analysis on the potential market losses, here.