Hurricane Ian Could Worsen Florida's Strapped Property Insurance Market

Experts are warning Hurricane Ian could worsen Florida’s already strapped property insurance market.

Numerous insurance companies in Florida have closed their doors in recent years, and most recently six insurers have been deemed insolvent this year alone.

“Florida’s domestic insurance market was extremely volatile before Hurricane Ian hit,” said Mark Friedlander, the Florida spokesperson for the Insurance Information Institute. “Now that Ian is here and could cause potentially mass destruction in many parts of the state … Florida’s insurance market is going to become more unstable."

Most recently, a court found that FedNat Insurance would need to be liquidated because of ongoing financial troubles. It is estimated this has left 56,000 policies canceled.

Friedlander says the impacts from Hurricane Ian are putting a strain on an already unstable market.

“It is very possible that more of the small Florida home insurers will fail, because of the mass volume of storm losses from Ian,” Friedlander said.

As private insurers close their doors, homeowners are increasingly turning to state-backed Citizens Property Insurance Corporation, an insurance company that was created as insurance of last resort.

Citizens currently have around 1,070,000 policies in force, compared to just 511,000 in 2020.

“If it reaches a point where citizens taps its reserves to pay out claims, then every Florida consumer is on the hook, to help citizens replenish its funds,” Friedlander said.

“We are financially in a strong position and will be ready to handle claims from Hurricane Ian," a representative of Citizens Property Insurance Corp. told NBC 6 Responds. “Our rates will not be affected by Hurricane Ian as they have already been set for the coming year.”

“The problem would be the next storm that occurs, severely reducing the amount of reserves that they have,” said Dr. Chuck Nyce, an associate professor of Risk and Insurance at Florida State University.

With the damage from Hurricane Ian yet to be fully assessed, we may not see the true impact on the insurance industry for years to come, he said.

“It looks like it is going to be a very serious storm with heavy losses. I think we are looking at the $40 billion range as a good estimate,” Dr. Nyce said.

Even if your homeowner’s insurance struggles to pay claims, there are two backstops in Florida to make sure consumers get their claims paid.

The Florida Hurricane Catastrophe Fund jumps in when an insurer runs out of reserves and cannot pay out claims.

The Florida Insurance Guaranty Association pays out claims when an insurance company goes insolvent.