What’s next for Florida property insurance in wake of Hurricane Idalia? [Orlando Sentinel]

TALLAHASSEE —  A month before Hurricane Idalia slammed into the Big Bend coast on Wednesday, Gov. Ron DeSantis responded to questions about the property insurance industry crisis, saying he would “knock on wood” that Florida didn’t see another major hurricane this season.

Hours before Idalia hit, he talked about lost hope.

“We were hoping not to have one this year, that maybe we would get off lucky, but that wasn’t in the cards,” he said, adding that he was “all ears” about ideas from lawmakers for more reforms.

Idalia’s assault on the state has magnified concerns about the fragile state of Florida’s insurance market, where despite previous industry-targeted reforms, homeowners still face massive increases in their premiums.

Critics of the governor and Republican-led Legislature say they need to act to help struggling Floridians.

“Luck and hope and knocking on things don’t provide assurance, and what is insurance but the assurance you are going to have the financial ability to replace, fix or rebuild,” said Nikki Fried, chair of the Florida Democratic Party and former agriculture commissioner.

Hundreds of thousands of property owners dropped by their private insurance companies are now being covered by Citizens Property Insurance, the state-backed carrier of last resort. Citizens has $531 billion of exposure, and if Florida gets hit with another major hurricane, then all of Florida’s insured property owners will be assessed a “hurricane tax” to cover any excess costs.

Idalia came close to that scenario.

Instead, it struck a mostly rural part of Florida’s Gulf Coast of modest homes, farms, marshland and timberland known for its fishing industry and ecotourism.

Idalia hit the coast with Category 3 winds of 125 mph and spawned a dangerous storm surge unprecedented in the region, devastating several small coastal communities and inland communities along its path to Georgia and the Carolinas.

Had Idalia gone further west, it would have hit Tallahassee and Leon County with a population of nearly 300,000. Farther east, it would have slammed into the nearly 800,000 people living in Pasco and Hernando counties.

The storm’s path “helped the insurance industry dodge a bullet,” said Andrew Siffert, senior vice president and chief meteorologist for the BMS reinsurer group.

Siffert estimated that Florida incurred $3 billion to $6 billion in insured property damages, down from an initial estimate of $7.5 billion. Gallagher RE, another reinsurance company, estimated insured damages were at the lower end of that range.

“This is not the devastating event that was feared even 24 hours ago,” Siffert said, pointing to weather reports of a day before the storm struck.

While its coastal flooding and surge levels were comparable to last year’s Hurricane Ian, the damage was far less because of where it hit, said Marshall Moss, a senior meteorologist with AccuWeather.

Even so, Moss said, “I don’t know how it wouldn’t impact the property insurance industry, which is already at such a position where it’s become unaffordable to many people.”

About 1 million people lived within 30 miles of landfall for Ian while there are about 38,000 people within that distance for Idalia, Moss said. Ian also tore through the heart of the peninsula causing damage nearly statewide.

Ian caused $113 billion in damage in the U.S., the National Hurricane Center said.

AccuWeather’s preliminary estimate of Idalia’s destruction is $18 billion to $20 billion for Florida, Georgia and South Carolina. AccuWeather includes uninsured losses, economic impact, costs for first responders, debris removal, and other factors, Moss said.

The Legislature has held two special sessions and one regular session passing laws to help stabilize the homeowner insurance market, including allocating $3 billion in bailout funds and making it harder to sue insurance companies over claims disputes.

In all, 14 companies are currently in liquidation while 15 others have stopped writing new policies, according to Mark Friedlander, spokesman for the Insurance Information Institute in New York.

Jeff Brandes, a former state senator and insurance reform advocate, said he thinks the industry can handle the payout for Idalia’s damage.

“The market will absorb this storm,” Brandes said. “This was not a major populated area of the state, while there is a lot of tree damage.”

Ian, on the other hand, was a direct hit to the insurance industry, Brandes said, and the state’s last chance to enact additional reforms before the next catastrophic storm hits a large, urban population. “There are no warning shots anymore.”

Despite that sense of urgency, Brandes sees no reason for a special session. Instead, he said, the Legislature needs to appoint a panel of the best minds the insurance industry has to offer and have it make recommendations on how to further improve the market for the 2024 legislative session that begins in January.

So far, legal reforms have cut down the number of lawsuits being filed, from more than 900 a month to about 700 a month after the state eliminated certain legal fees for lawyers, Brandes said.

While the insurance industry got many of the changes it requested from the Legislature, there is more work to be done, Brandes said, including getting rid of costs such as the automatic replacement of roofs.

Among the reforms passed that benefited the industry was a call for stricter monitoring of how quickly insurance companies pay out claims, he said.

“Governor DeSantis and CFO Jimmy Patronis are going to pay a lot of attention to how claims are being handled and the overall response to the storm,” Brandes said.

Overall, Brandes is optimistic.

Once the market stabilizes, new companies will come back to Florida and create a more competitive market that will bring rates down again, he said.

“The insurance industry is shifting, and there will be new participants,” Brandes said.

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