Floridians already pay the highest home insurance premiums in the country, and while the state’s top politicians say they are taking steps to fix it, a spate of powerful hurricanes could halt any progress.
Hurricane Milton hit the state behind schedule Wednesday near Sarasota and unleashed hurricane-force winds across the length of the Florida peninsula before reaching the Atlantic Ocean.
There were concerns that the storm would make a direct hit in the Tampa Bay region, a low-lying area prone to storm surges. That didn’t happen, and according to Gov. Ron DeSantis, the state avoided the “worst-case scenario.”
Still, the damage could run into the billions. And that could have a cascading effect on what residents ultimately pay. This is the third hurricane to hit Florida this year, and the storm season won’t end until November 30.
“Homeowner rates are likely to continue to rise as insurers try to match pricing to rising risk,” the ratings agency warned In the Moody’s report published on Thursdayshortly after Milton hit.
AM Best, an insurance rating agency, published: comment before the storm makes landfall, a warning that damage could prompt reinsurance companies that provide backup financial support to insurers to maintain current price levels. Reinsurance costs are the main expense of insurance companies.
Profits may evaporate
The analysis warned that some insurers – especially those operating exclusively in Florida – could run into financial trouble and that signs of progress toward easier-to-manage premiums that state leaders have touted in recent months could evaporate.
“A tough reinsurance market, possible local bankruptcies and falling capital among Florida-based insurers will significantly put pressure on the Florida real estate market,” AM Best reports.
But on Thursday, DeSantis again pushed back some initial damage projections, especially those made by Wall Street analysts who suggested Hurricane Milton could have caused more than $50 billion in insured damage.
“How the hell would a Wall Street analyst know that? It was dark all day,” DeSantis said at a morning news conference. “I mean, give me a break with some of this stuff.”
Even before Milton arrived, Hurricane Helene hit Florida two weeks ago before moving through the Southeast and causing impacts nearly $1.2 billion in insured losses according to the state Office of Insurance Regulation (OIR). More than 12,500 claims related to Helene have been reported to Citizens Property Insurance Corp., the state-backed insurer of last resort.
On Friday OIR reported that Milton left behind at least $586 million in insured damage.
A Citizens spokesman said Friday that the carrier has already received nearly 12,000 claims related to Hurricane Milton. That number is expected to rise significantly as evacuated people return to their homes and assess the damage.
Citizens maintained a financial surplus ahead of hurricane season, but faced significant risks in the Tampa Bay area. If the company exhausts its reserves, it can impose a surcharge on a wide range of private insurance policies, including auto insurance, meaning every policyholder in Florida could end up paying more.
A shaky market
Florida’s insurance market has been struggling for years due to an escalate in the number of storms that have hit the state over the past eight years (after a 10-year hiatus from hurricanes) as well as the costs of defending against policyholder lawsuits. Some insurers increased their rates, some went bankrupt or withdrew from the state.
DeSantis and Republicans in charge of the Legislature responded in behind schedule 2022 by stringently limiting lawsuits against insurers. They haven’t required insurers to lower rates, but state officials insist the law has encouraged modern companies to come to Florida; they also note that many companies did not ask for rate increases in 2024.
Just hours after Hurricane Milton hit the state, Insurance Commissioner Michael Yaworsky insisted the market was improving and said one company – USAA – had committed to continuing to invest in the state after a meeting he and Gov. took place this week with company representatives.
Trends “indicate continued strength in Florida’s property insurance market, which is contrary to the narrative that has been circulating about our industry in recent months,” Yaworsky said.
OIR did not directly respond whether the meeting between DeSantis, Yaworsky and USAA representatives took place before or after Milton made landfall.
“OIR maintains an open dialogue with all insurers in Florida. Discussions with USAA began before Hurricanes Helene and Milton and continue as they support their members in recovery efforts,” said Shiloh Elliott, OIR press secretary.
