Hurricanes Helene and Milton bring billion-dollar strain to Orlando’s insurance industry
Writer: Pablo Marquez
October 2024 — Florida’s insurance industry is reeling after two hurricanes struck within weeks, compounding what’s already been a costly storm season. Hurricane Helene hit in late September, followed by Hurricane Milton in early October — adding millions in damages and pushing insurers to the brink as the season wears on. Milton alone may have caused up to $55 billion in property damage and a combined $36 billion hit for insurers, according to preliminary estimates. Florida’s Office of Insurance Regulation also reported that Helene produced $1.2 billion in insured losses, with Milton tacking on another $586 million, adding over 12,000 new claims to Citizens Property Insurance Corp.
Many insurers have scaled back or exited Florida in recent years, worn down by the constant barrage of hurricanes. Stepping into the gap are state-backed Citizens Property Insurance and a handful of private firms, including State Farm Florida, Universal Property & Casualty, American Strategic Insurance, Slide Insurance, and Castle Key Indemnity, providing critical coverage for Floridians facing mounting storm risks.
“At this time, State Farm is primarily concerned with assisting its Florida customers with recovering from the hurricanes that recently made landfall in the state. State Farm plans to continue our presence in the Florida insurance marketplace. Our current plans include a commitment to responsible growth so that we can maintain the financial strength to deliver on our promises to our customers,” declared State Farm.
Local insurance experts are cautiously optimistic, suggesting the market can weather another hurricane this season without destabilizing.
“Citizens right now is in a very strong financial position. We expect to be able to pay all claims on Milton and Helene without having to levy assessments on non-Citizens policyholders,” said Citizens Property Insurance spokesman Michael Peltier, as cited by Reuters.
However, two major rating agencies, AM Best and Fitch Ratings, sounded alarms over Hurricane Milton, warning that the storm could strain Florida-based insurers and potentially weaken the state’s home insurance market.
“Hurricane Milton poses a significant threat to the Florida property insurers concentrated in the state that lack diversification and therefore are acutely susceptible to significant catastrophic events,” said AM Best in a news release.
“The Florida homeowners’ insurance market’s precarious position will weaken further with the destruction generated by Milton.” It raised concerns that Florida insurers are reliant on reinsurance — insurance that insurers buy from the global market to ensure they can pay all claims during active hurricane seasons. And it also said they have low surplus levels and concentrate their business in Florida. Those factors raise “questions as to their ability to raise capital following large loss events,” declared Fitch Ratings, as cited by The South Florida Sun Sentinel.
With damage costs potentially reaching billions, Hurricane Milton may add even more pressure on Florida’s already sky-high insurance premiums — the nation’s highest. Efforts by Florida lawmakers to curb rising home insurance costs could be eroded by relentless hurricane seasons, sparking fresh concerns over affordability. The pressing question now: how significantly will hurricanes drive up insurance rates? If premiums climb too high, residents may increasingly opt out of coverage. “Homeowners rates are likely to continue to increase as insurers seek to match price to rising risk,” Moody’s Ratings warned.
