Floridians already pay more for homeowners’ insurance than anywhere in the US; three hurricanes could blow away recent insurance ‘fixes’

Floridians already pay the highest homeowners insurance premiums in the nation, and while the state's top politicians contend that they have taken steps to fix that, a rash of major hurricanes may have blown any progress.

Hurricane Milton slammed into the state late Wednesday near Sarasota and maintained hurricane-force winds all the way across the Florida peninsula before entering the Atlantic Ocean.

There were fears that the storm would take a direct hit at the Tampa Bay region, a low-lying area vulnerable to storm surge. That didn't happen, and the state avoided the "worst case scenario," according to Gov. Ron DeSantis.

Still the damage could run into the billions. And that could have a cascading effect on what residents ultimately pay. This is now the third hurricane to make landfall in Florida this year and storm season doesn't end until Nov. 30.

"Homeowners rates are likely to continue to increase as insurers seek to match price to rising risk," warned the rating agency Moody's in a report issued on Thursday, shortly after Milton hit.

A.M. Best, an insurance rating agency, put out a commentary ahead of the storm's landfall warning that the damage could prompt reinsurance companies that provide backup financial support to insurers to maintain their existing price levels. Reinsurance costs are a primary expense for insurance companies.

Gains could evaporate

The analysis warned that some insurers — especially those operating in Florida only — may run into financial trouble and that the signs of progress toward more manageable premiums that state leaders have touted in recent months may evaporate.

"The hard reinsurance market, possible local insolvencies, and declining capital among insurers concentrated in Florida will significantly pressure the Florida property market," A.M. Best reported.

DeSantis on Thursday, however, pushed back again some of the initial damage projections, especially those from Wall Street analysts who had suggested Hurricane Milton might have caused upward of $50 billion in insured damage.

"How the hell would a Wall Street analyst be able to know? It's been dark all day," DeSantis said at a morning press conference. "I mean, give me a break on some of this stuff."

Even before Milton showed up, Hurricane Helene hit Florida two weeks ago before sweeping through the Southeast and has produced nearly $1.2 billion in insured losses in Florida so far, according to the state Office of Insurance Regulation (OIR). More than 12,500 claims related to Helene have been filed with Citizens Property Insurance Corp., the state-backed insurer of last resort.

On Friday the OIR reported that Milton left at least $586 million in insured damage in its wake.

A Citizens spokesperson said on Friday that the carrier had already received nearly 12,000 claims associated with Hurricane Milton. That number is expected to grow significantly as people who evacuated return to their homes and assess the damage.

Citizens maintained a financial surplus heading into hurricane season but had significant exposure in the Tampa Bay area. If the company exhausts its reserves, it could impose a surcharge on a broad array of private insurance policies, including auto insurance, meaning every policyholder in Florida could pay more.

Rickety market

Florida's insurance market has been rickety for years due to an uptick in the number of storms hitting the state over the past eight years (following a 10-year hiatus from hurricanes) as well as companies' costs of defending policyholder lawsuits. Some insurers raised rates, while some went bankrupt or withdrew from the state.

DeSantis and Republicans in charge of the Legislature responded in late 2022 by strictly limiting lawsuits against insurers. They didn't require insurers to lower their rates, but state officials insist the law has encouraged new companies to come to Florida; they note, too, that many companies did not ask for rate hikes in 2024.

Just hours after Hurricane Milton pounded the state, Insurance Commissioner Michael Yaworsky insisted that the market was getting better and said that one company — USAA — had committed to continue to invest in the state following a meeting he and the governor had this week with company representatives.

The trends "point to continued strengthening of Florida's property insurance market, which is contrary to the narrative that has been circulating about our industry in recent months," Yaworsky said.

The OIR did not directly answer whether the meeting between DeSantis, Yaworsky, and USAA representatives occurred before or after Milton made landfall.

"OIR maintains open dialogue with all insurers in Florida. Discussions with USAA began prior to Hurricanes Helene and Milton and remain ongoing as they support their members in their recovery efforts," said Shiloh Elliott, press secretary for the OIR.

This story appeared on the website of the Florida Phoenix, a nonprofit news organization dedicated to coverage of state government and politics from Tallahassee.