As Hurricane Idalia Deluges Florida, Property Insurance Exposure Exceeds $238B
More than 800,000 residences were in the direct path of Hurricane Idalia as the Category 3 storm bore down on Florida’s Gulf Coast Wednesday, and state officials say they are keeping a watchful eye on insurance carriers even before claims begin to roll in.
Idalia’s arrival in the early hours of Wednesday morning threatened storm surge damage to 808,321 single-family and multifamily homes with a combined reconstruction cost of $238.4B, according to a CoreLogic analysis. The potential for a wave of insurance claims prompted Florida’s insurance regulator to send a memo to providers reminding them of a law passed this spring meant to improve how they handle claims.
“Policyholders have the right to expect prompt, efficient, and fair claims adjustment service, especially after a catastrophic loss,” the state’s Office of Insurance Regulation said in the memo, the Miami Herald reported.
The office’s “primary concern is that consumers’ issues are properly and timely resolved.”
Gov. Ron DeSantis issued a starker warning to providers Monday night.
“We’re gonna be watching,” he said, according to the Herald. “We want to make people whole who pay for this service.”
State-run Citizens Property Insurance Corp. faces the largest exposure to damage from the storm. Citizens has around 190,700 policies that include wind coverage in eight coastal counties that were expected to be impacted, with $72B in potential exposure, according to data from the Office of Insurance Regulation reported by the South Florida Business Journal.
Castle Key Indemnity Co. has the second-largest exposure, but the insurance provider’s 28,000 policies and $9.9B exposure pales in comparison to Citizens. The calculations cover policies in Pinellas, Pasco, Hernando, Citrus, Dixie, Taylor and Jefferson counties.
Lee County, which includes Cape Coral and Fort Myers, has the most homes facing storm surge threats, according to CoreLogic, with 264,593 homes at risk and a replacement cost of $83.7B. Pinellas County, home to Clearwater and St. Petersburg, came in second with 186,600 at-risk homes valued at $49.4B.
While neither county was in the direct path of Idalia, both faced significant risk of storm surge from high winds as the hurricane passed by on its way to make direct landfall in less-populated counties along Florida’s Gulf Coast. Firefighters were rescuing St. Petersburg residents from flooded homes Wednesday morning, the Tampa Bay Times reported, and some areas saw flooding as high as 2 to 3 feet.
“Due to the sparsely populated forecasted impact area, there will likely be a lower insured loss ceiling from Idalia, compared to last year’s Hurricane Ian,” Jon Schneyer, the director of catastrophe response at CoreLogic, said in a release. “Even so, systems that make landfall along the Gulf Coast are likely to generate a more substantial storm surge than equivalent storms that hit the Atlantic Coast."
The warnings to insurance providers from state officials come after at least seven adjusters came forward in the wake of Hurricane Ian in September 2022 with allegations that insurers manipulated their reports to pay homeowners less than what the adjusters had estimated.
Florida’s insurance market has seen turbulence since that storm. Floridians pay the highest homeowners insurance premiums in the country, according to the Insurance Information Institute, and at least 16 property insurance companies had left the state as of June.
Insurers' flight from Florida has left the state carrier Citizens as the largest provider, underwriting more than 1.3 million policies even though it only offers policies to homeowners unable to find coverage in the private market.
The market has seen some recent signs of stabilization. Four companies — Orion180 Select Insurance Co., Orion180 Insurance Co., Mainsail Insurance Co. and Tailrow Insurance Co. — entered the Florida market this year.
Despite the market fluctuation, changes to the law governing insurance policies in the state that were meant to reduce the costs to providers have created a more stable atmosphere, Mark Friedlander, the director of corporate communications at the Insurance Information Institute, told Bisnow last month.
“If you get three or four major hurricanes striking — particularly in South Florida, where we have the most dense areas — then we could be talking about a different issue,” Friedlander said. “But right now, going into peak season, insurers seem to be in a good financial position where they will be able to cover losses.”
