The path of destruction left in the wake of Hurricane Ian is historic. The Category 4 hurricane, just shy of a Category 5, annihilated many parts of Florida through unrelenting winds and tremendous storm surges. Although there is no “appropriate” time to face an environmental catastrophe of this magnitude, Hurricane Ian struck Florida at a particularly vulnerable time. Before Hurricane Ian, Florida was already home to the highest insurance premiums in the United States. Insurance companies predict losses from Hurricane Ian to reach the billions. These high estimates beg the question, what will happen to Florida’s insurance industry?
The Already Fragile State of Florida’s Insurance Industry
Since 1851, Florida has ranked number one as the state hit by the most hurricanes. Florida experienced 120 hurricanes between 1851 and 2018, with 37 ranking between Category 3 and Category 5. This consistent assault of powerful hurricanes has contributed to a stressed, overstretched, and high-priced insurance landscape. This year alone, the state has declared six property insurance companies insolvent. An insurance company is insolvent if it does not have enough money to pay policyholders.
In addition to the six insolvent companies, twenty-seven other insurance companies are on the Florida Office of Insurance Regulation’s financial watchlist. Therefore, even more insurance companies could soon go bankrupt due to the ramifications of Hurricane Ian. Insurance rates in Florida have been on the rise for years. Before Hurricane Ian, Florida’s insurance premiums were already three times the national average at roughly $4,200. With Hurricane Ian proving to be its most historic natural disaster thus far, insurance conditions will likely worsen in the state.
What Else Is to Blame for Florida’s High Insurance Rates?
Experts have heavily debated the cause of Florida’s collapsing insurance market. While insurance companies have pointed the blame at extensive litigation, many attorneys have argued against this position. Attorneys counter that litigation would be unnecessary if insurance companies properly pay the policyholders. For example, insurance companies denied roughly 30% of the nearly 1 million claims filed after Hurricane Irma pummeled the state in 2017. With insurance companies in Florida denying claims, many have sought the help of lawyers to help recover compensation for their storm-related property damage.
Consequences of Hurricane Ian for Insurance Companies
A spokesperson for the Insurance Information Institute revealed insurance rates will inevitably increase in the aftermath of Hurricane Ian. Although this is only a prediction, this is a common trend seen with other significant storms in the past. Also, Hurricane Ian will still affect policyholders left relatively unscathed since it will push insurance companies to implement surcharges. The sheer amount of Hurricane Ian-related claims might place the final nail in the coffin for many insurance companies. As more insurance companies enter insolvency, this will leave policyholders to seek assistance from Florida Insurance Guaranty Association.
Furthermore, attorneys predict countless policyholders will have difficulty recovering compensation for their Hurricane Ian-related claims. The Category 4 hurricane plagued residents of Florida’s inland areas with massive floods. Since these homes resided outside flood zones, many did not have separate flood insurance. Homeowners with just a standard policy will only have wind-related damage covered but are left responsible for flood damage. However, even those with flood insurance may find themselves in a frustrating situation. Insurance companies will expectantly dispute over who is responsible for covering the damages. While the wind-policy firm will suggest that a problem falls under flood coverage, the other flood insurance company may refute that. This blame game can lengthen the waiting period for affected Florida homeowners.