Hurricane Milton is not likely to affect credit for rated property and casualty insurers and global reinsurers given very strong capital levels. However, Florida property insurers are vulnerable to the extent the major hurricane generates losses in excess of reinsurance limits.
According to Fitch Ratings, Milton made landfall near Siesta Key, FL as a Category 3 hurricane and traveled across central Florida before moving off the east coast as a Category 1 storm. It has caused considerable economic and insured losses from high winds, substantial storm surge, heavy rainfall, tornadoes and flooding.
We estimate Milton’s insured losses will range from $30-50 bn, the largest insured loss since Hurricane Ian ravaged a similar path in 2022 and caused $60 bn of losses.
Hurricane Milton will be a 4Q and 2024 earnings event for large rated insurers with Florida exposure. The insurance losses will hit reinsurance attachment points, shifting a meaningful amount of losses to the reinsurance market, particularly from the Florida specialist companies with lower retentions.
Hurricane Milton’s ultimate insured losses
Ultimate losses will also depend on demand surge, as Milton follows closely on the heels of Hurricane Helene, a Category 4 that devastated the southeast U.S. two weeks earlier.
Higher demand and limited supply of labor and materials needed to adjust claims and repair/rebuild following multiple large-scale disasters can increase insured losses by 20% or more.
Milton will drive global industry insured losses in 2024 past $100 bn, marking the fifth year in a row that losses have exceeded this level.
This consistent trend in high catastrophe losses is expected to curb any rate reductions in property catastrophe for 2025 as (re)insurers maintain a disciplined approach to underwriting. In Florida, property rates saw declines between 0% and 10% during the June/July 2024 reinsurance renewals, influenced by the relatively mild 2023 hurricane season.
Depending on Milton’s total losses and any further catastrophe events in 2024, property premium rates could firm up. However, the sharp reinsurance price hikes seen in 2023 are unlikely to repeat, given the current pricing sufficiency in the market.
Milton’s impact will extend across P&C insurers
Milton’s impact will extend across P&C insurers, especially as primary homeowners’ insurers in Florida manage risk by passing a substantial portion of business to third-party reinsurers. Major national insurers hold minimal market share in Florida and have reduced their exposure through non-renewals, aiming to balance risk exposure and manage reinsurance program costs.
Economic and insured losses from Hurricane Milton remain uncertain, Milton is the second major storm to hit the U.S. within two weeks, following Hurricane Helene.
Hurricane Milton is anticipated to be one of the most powerful and economically detrimental hurricanes to make landfall in the western region of Florida.
Beinsure Media analysts reviewed S&P report and catastrophe modeling companies’ forecasts regarding the potential losses from Hurricane Milton and present a review on the Milton’s impact on major Florida’s insurance companies and the global reinsurance sector.
Due to the uncertainty around the scale of losses, S&P Global is analyzing several industry loss scenarios and their potential effects on U.S. insurers. For context, Hurricane Ian, a Category 4 storm that hit Florida in 2022, led to insured losses of about $60 bn.
Florida’s homeowners’ insurance market, already fragile, faces further destabilization with Milton’s destruction. Adequate reinsurance coverage remains a critical concern for Florida homeowners’ specialists, given low absolute capital, limited diversification, and uncertainties about raising capital following major loss events.
Florida Insurance Market
Specialist reinsurance programs for Florida homeowners are structured to cover losses up to approximately 1-in-100-year events. Losses beyond this threshold could surpass reinsurance coverage, potentially eroding capital quickly.
While Milton’s losses are not expected to exhaust reinsurance protection for most Florida-focused insurers, some with unique risk profiles or significant modeling gaps may face unexpectedly high gross losses.
Insurers also remain exposed should additional storms impact Florida later this season.
Milton will put recent Florida legislative and regulatory tort reforms to the test, including changes like removing one-way attorney fees and banning assignment of benefits. The financial success of these reforms, however, will require validation through multiple catastrophe events to confirm their effectiveness in supporting long-term private market stability.
TOP 10 Florida P&C insurers – Personal Personal Lines
| № | Florida – Personal Lines | Premiums, $ mn | Share, % |
| 1 | Citizens Property Insurance | 3,208.9 | 18.6 |
| 2 | Universal Insurance Holding Group | 1,463.3 | 8.5 |
| 3 | State Farm Mutual Group | 1,188.9 | 6.9 |
| 4 | Florida Peninsula Group | 843.4 | 4.9 |
| 5 | Tower Hill Group | 752.1 | 4.4 |
| 6 | USAA Group | 697.1 | 4.0 |
| 7 | First Protective Insurance Co. | 683.4 | 4.0 |
| 8 | Progressive Corp. | 632.5 | 3.7 |
| 9 | Slide Insurance Holdings, Inc. | 625.0 | 3.6 |
| 10 | HCI Group | 615.2 | 3.6 |
| All Others | 6572.7 | 38.0 | |
| Total | 17,283.0 | 100.0 |
TOP 10 Florida P&C insurers – Personal Commerical Lines
| № | Florida – Commercial Lines | Premiums, $ mn | Share, % |
| 1 | Citizens Property Ins Corp. | 1,862.0 | 12.3 |
| 2 | Berkshire Hathaway Group | 1,010.2 | 6.7 |
| 3 | Zurich Insurance Group | 796.0 | 5.3 |
| 4 | The Chubb Corporation | 685.8 | 4.5 |
| 5 | American Coastal Insurance Corporation | 635.6 | 4.2 |
| 6 | Assurant Inc. Group | 579.1 | 3.8 |
| 7 | American International Group | 497.5 | 3.3 |
| 8 | Liberty Mutual Insurance Group | 374.3 | 2.5 |
| 9 | CNA Insurance Group | 339.3 | 2.2 |
| 10 | QBE Insurance Group | 334.4 | 2.2 |
| All Others | 8,031.6 | 53.0 | |
| Total | 15,145.8 | 100.0 |
The insurance industry hasn’t encountered an event of this magnitude in such a populated area for years.
U.S. insurers wrote $1.37 bn in private flood premiums across the U.S., with $258.5 mn of that in Florida. This compares to $88.4 mn in 2019.
One scenario has Milton’s strongest winds hitting Tampa and St. Petersburg on Wednesday, causing record storm surges in Tampa Bay and Sarasota, just two weeks after Helene broke records in the same region. Evacuations are already in progress. If the storm lands south of Tampa, a “gray swan” event may be averted. The last major hurricane to hit Tampa Bay was in 1921, and a Category 1 storm struck in 1946.
Florida reported $122 mn in estimated insured losses from Hurricane Debby, with 59.6% of claims closed, according to the Office of Insurance Regulation (OIR).
U.S. P&C insurance market returns to underwriting profitability
The U.S. property and casualty insurance market is set for a return to underwriting profitability and significant improvements in return on capital for the full 2024 year. However, results may not match first-quarter levels due to uncertainty about natural catastrophe exposures and loss reserve experience, according to Fitch Ratings.
In the interim reporting period, there’s a clear disparity in underwriting performance between personal and commercial lines, as evidenced by the direct loss ratios. The personal auto sector continues to grapple with escalating loss severity, impacting incurred losses.
U.S. P&C insurers achieved a strong statutory underwriting profit year-over-year in the Q3 2024, driven by lower winter storm losses and a recovery in personal auto results.
The market faces significant challenges in maintaining commercial lines pricing to meet ongoing loss-cost inflation and increased litigation risks in several segments.
Favorable pricing conditions in the first quarter of 2024 supported strong growth in net written and earned premiums, at 10% and 11%, respectively.
FAQ
No, Milton is unlikely to affect the credit ratings of rated P&C insurers and global reinsurers due to their robust capital levels. However, some Florida property insurers may be vulnerable if Milton’s losses exceed their reinsurance limits.
Insured losses from Milton are expected to range from $30 bn to $50 bn, making it the largest loss event since Hurricane Ian, which caused $60 bn in losses along a similar path in 2022.
Losses from Milton will meet reinsurance attachment points, pushing a significant portion of the burden to the reinsurance market, especially from Florida specialist insurers with lower retention levels.
Yes, a demand surge from high rebuilding needs after recent storms, such as Hurricane Helene, could increase insured losses by 20% or more due to higher costs for labor and materials.
Milton’s continued high catastrophe losses may limit potential rate reductions in property catastrophe insurance, potentially leading to firming rates in 2025. However, significant reinsurance price increases like those in 2023 are not anticipated.
Florida’s homeowners’ insurance market, already in a delicate position, may face further stress from Milton. Sufficient reinsurance coverage remains a concern due to low capital levels, limited diversification, and challenges in raising capital after large losses.
The effectiveness of recent Florida insurance reforms, such as the removal of one-way attorney fees and the ban on assignment of benefits, will need to be tested through multiple catastrophe events to assess their long-term impact on market stability.
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AUTHORS: Brian Schneider, CPA, CPCU, ARe – Senior Director, Insurance at Fitch Ratings, Gerry Glombicki, CPA, CISSP, CCSP, CISA, ARM – Senior Director, North American Insurance at Fitch Ratings, Laura Kaster, CFA – Senior Director at Fitch Wire
