Florida homeowners’ insurance market’s already uncertain position is set to weaken further with the destruction caused by Hurricane Ian, which is potentially the second-largest hurricane in terms of insured losses.
According to Fitch Ratings, losses will resonate through the primary and assumed reinsurance markets with expectations of sharp changes in pricing and underwriting terms. The future primary market capacity and reinsurer risk appetite will grow increasingly uncertain.
The broader concern is that a lack of property coverage availability for Florida residents could promote economic repercussions affecting the state’s real estate, mortgage and labour markets.
The effects of Ian losses on different types of re/insurance organisations will vary but will still influence future pricing and market conditions and the ability of re/insurers to withstand the next major Florida weather event.
Signs of new insurers entering the Florida homeowners primary market are few, which will lead to further policy count growth at insurer of last resort, Citizens Property Insurance Corporation.
Hurricane Ian could lead to more market exits by Florida homeowners’ insurers, as many private carriers face capital concerns, coupled with reduced availability and sharply higher costs for reinsurance.
Various catastrophe modelling experts have pegged insured loss estimates for Ian of between $35 mn and $73 bn, with economic losses from the event likely exceeding $100 bn.
Fitch observes that losses from November’s Hurricane Nicole will incrementally compound this total with insured loss estimates of between $1 bn and $2 bn.