Insurance Source Of Naples - Thursday, Sept. 29, 2022 Water remains in homes at Palmetto Palms Mobile Home Park on Summerlin Road, which was largely destroyed after Hurricane Ian made landfall Wednesday night. [Douglas R. Clifford | time]
TALLAHASSEE - Even before Hurricane Ian made landfall, headlines were swirling that the storm would spell doom for Florida's homeowners insurance market.
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This year, six property insurance companies have gone bankrupt, including one declared bankrupt on the same day as Tropical Storm Ian formed. The Norwegian Social Security Administration is closely monitoring dozens of other companies on the fritz, and homeowners' premiums have been among the highest in the nation.
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"This is a test for the entire insurance industry," said Michael Carlson, president of the Florida Personal Insurance Association, referring to Hurricane Ian. Union represents State Farm, Allstate, Farmers and Progressive. "It looks like a lot of destruction."
While a 500-mile-wide Category 4 hurricane isn't good for anyone, it doesn't spell disaster for Florida insurers — at least not yet. The insurance market is complex, with shifting responsibilities and protections for paying claims.
But if the hurricane isn't a disaster for insurers, it likely is one for thousands of Floridians whose homes have been flooded by rain or storm surge.
This would place the greatest financial burden on the state's flood insurance program, which provides the vast majority of residential flood insurance, rather than on Florida insurers.
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And if homeowners don't have flood insurance, they could be hit hard. (More on that later.)
That doesn't mean there won't likely be thousands of wind-related insurance claims. And because insurers can dispute liability for some of these losses, homeowners are likely to sue their insurers—a headache for homeowners and increased costs for insurers, partly because of attorneys' fees. It's a scenario that happened several times after Hurricane Michael in 2018.
Already, one group is estimating $25 billion to $40 billion in insured losses, but other observers say it's too early to tell. It will first have to make adjustments from insurance companies and the Federal Emergency Management Agency to assess the damage, experts say.
"I haven't seen any loss estimates that I can rely on," said Kyle Ulrich, president and CEO of the Florida Association of Insurance Agents.
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Insurers are meant to prepare for hurricane season by purchasing reinsurance — basically coverage for insurance companies.
In the event of a hurricane, these reinsurers will foot the bill for losses, even though insurance companies are required to pay deductibles.
Before each year's hurricane season, the Florida Bureau of Insurance implements a "stress test" to ensure insurers have adequate coverage. Insurers need to model a historical hurricane scenario, or a series of hurricane scenarios, and determine whether their reinsurance is adequate for the modeled losses.
Last year, 67 insurers had to model three scenarios, one of which was Hurricane Andrew in 1992. Only two companies failed; One was liquidated and the other added enough capital to meet the terms.
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This year, the insurer's tests included the 1928 Lake Okeechobee hurricane, which killed nearly 2,500 people, the deadliest in the state's history. However, the regulation of the insurance office did not disclose the results of the company in the examination.
Insurers also have a safety net with the Florida Hurricane Disaster Fund. Businesses have to pay into it, and when a hurricane like Ian hits, the fund helps pay claims.
In Charlotte and Lee counties, which appeared to be hardest hit by Ian, only 30% of households have flood insurance through the National Flood Insurance Program, the statistics show.
There will be some help for homeowners without flood insurance, but probably not enough to make them whole.
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FEMA's disaster declaration, approved by President Joe Biden, made people eligible to apply for their individual and family plans if they live in 13 counties: Charlotte, Collier, DeSoto, Hardee, Hillsborough, Lee, Manatee, Orange, Osceola, Pinellas, Polk , Sarasota and Seminole. May be more.
The program allows residents to apply for federal assistance to repair their homes and vehicles if they don't have — or don't have enough — flood or vehicle insurance.
But home repair assistance is limited to less than $40,000, according to The New York Times. Congress could provide more money to the U.S. Department of Housing and Urban Development to set up disaster recovery grants for states to pay homeowners, but it could take years to reach homeowners, the Times reported.
Small Business offers low-interest loans to homeowners, businesses and nonprofits after a disaster, but the loan must be repaid. As the Times points out, that could be a second mortgage.
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As the insurers failed, many of these companies' policies ended up with Citizens Property Insurance, Florida's state-run insurer, unable to find coverage in the private market. (It does not offer flood insurance.)
Many are concerned about the growing trend of citizens, which have risen from 420,000 in October 2019 to just under 1 million. (The peak was about 1.5 million in 2011.) If the disaster strikes and citizens can't pay claims, Florida taxpayers will be on the hook.
However, the company continues to earn profits. It has a $6.8 billion surplus ($6.5 billion in other accounts to pay claims), and the storm appears to have hit parts of the state where citizens are not at high risk.
The company estimates it could see 225,000 claims from Hurricane Ian, and business losses could range from $1.9 billion to $3.7 billion, spokesman Michael Peltier said.
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Homeowners have two years to file claims after the storm, so it may take time for insurers to feel Ian's impact.
In the meantime, interest rates for homeowners may continue to rise, although there is not necessarily a correlation between rising interest rates and hurricanes. Floridians saw rising rates after a series of hurricanes in 2004 and 2005 because they drove up the cost of reinsurance. The State Police Officers and the then State Govt. Charlie Crist responded by allowing businesses to more easily access hurricane disaster funds.
Until Ian, Florida had not been directly hit by a hurricane since Hurricane Michael in 2018, but rates have risen sharply. In 2019, when DeSantis was sworn into office, Floridians paid an average premium of $1,988. This year, it's now $4,231, three times the national average.
In response, state lawmakers in recent years have passed modest changes to state insurance laws, mostly aimed at curbing lawsuits and allowing companies to tap new state-created reinsurance funds.
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"We look forward to seeing the success of this legislation in stabilizing the market," said Jeff Waters, meteorologist and senior product manager at risk management firm RMS. Naples, Florida car insurance is more expensive than the rest of the country. However, knowing what factors go into your price and following the tips below can help you save.
Naples, Florida has some of the most expensive insurance rates in the United States. Purchasing auto insurance is required if you drive in Florida and the minimum insurance requirements are:
Florida drivers must also carry personal injury coverage. According to Trusted Choice, the average annual rate for car insurance in Florida is $1742. This is due to Florida's auto insurance regulations and heavy traffic. Full coverage is even more expensive, with an average annual rate of $3,230.
Florida is also more prone to rain and storms, which can put your vehicle at risk of water damage or flooding. Insurance companies consider these factors, leading to higher rates.
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Florida is a no-fault auto insurance state. This means that regardless of who was at fault in the accident, each driver will rely on their insurance company to pay for the damages. For this reason, drivers are also required to carry Personal Injury Protection (PIP). This is a type of insurance that covers your medical bills if you are injured. PIP covers:
If you buy the minimum coverage, it also has a limit of $10,000. Accident protection insurance helps you cover your losses if you get into an accident with someone who doesn't have insurance. According to Reliable Choice, about 24% of Florida drivers do not have auto insurance. Adding uninsured coverage to your insurance policy can also be beneficial.
Florida also has a financial liability law that requires you to carry more than the state minimum insurance if you injure or damage someone else. It is also called SR-22 or FR-44 insurance. This is a document that you file with the government and let them know that you meet the minimum insurance requirements.
Knowing what factors go into calculating insurance rates in Naples, Florida can be helpful. Insurance companies consider the following:
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You may not be able to control some of these factors, such as your age, but you can improve your driving record or credit score. Safe driving and avoiding tickets can lead to more affordable prices.
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