Hurricane Ian Wreaks Havoc in Florida, Threatens Homeowners Insurance Market

Hurricane Ian leaves Florida in ruins, trapping people in flooded homes and knocking out electricity to 2.67 million Florida homes and businesses. It flooded both the state’s coasts, cut off the only road access to the barrier island, ripped homes from their slabs, and deposited them among the shredded wreckage.

At least 15 deaths were confirmed in Florida, while three other people were reportedly killed in Cuba after the hurricane struck the island. As the hurricane intensifies into Category 1 hurricane, it is forecast to make a second landfall in South Carolina on Friday.

With hurricane Ian moving south, thousands of people in Florida are assessing the damage and losses to their homes and businesses. Even before Ian made landfall, the home insurance market in Florida was already fragile due to rampant roof replacement claim schemes and excessive litigation filed against property insurers.

As per experts, a major storm like Ian could threaten some of the insurance companies into insolvency, making it even more difficult for the insured to collect claims.

According to Jeff Waters, an analyst at Moody’s Analytics subsidiary RMS and a meteorologist:

“Hurricane Ian will test the financial preparedness of some insurers to cover losses to their portfolios, in particular smaller Florida carriers with high exposure concentrations in the impacted areas.”

The insurance premiums in Florida are already higher than the national average. In fact, in 2021, Florida homeowners saw their premiums increase by an average of 25%, compared with 4% for the rest of the U.S.

Every policyholder in the state of Florida will be impacted by the Hurricane as it can have a direct impact on their pocketbooks states Florida state Sen. Jeff Brandes, a Republican from St. Petersburg and a vocal critic of Florida’s insurance industry. He also predicts policyholders will see rate hikes of up to 40% next year as a result of Ian.

Flood damage is often not covered by homeowner policies, and most people who live in flood zones frequently receive insurance from the Federal Emergency Management Agency (FEMA). The majority of private property insurance providers mainly cover wind damage.

According to Friedlander, more than 80% of people do not have flood insurance in Florida.

“With catastrophic flooding from Ian occurring across the state, many homeowners will not have financial protection from these losses.”

If you live in a flood-prone zone, your mortgage lender most certainly needs you to get flood insurance. You can get coverage either from a private insurer or the federal program, which is how most homeowners obtain insurance. However, there are limits and restrictions on what is covered. In addition, policies take 30 days to take effect, with a few exceptions.