Florida Insurers and Hurricane Ian

Seems like this is going to get extremely ugly. Class action for sure.

WP seems to have got the scoop on this one.

Class action, sure. But if the insurers all go bankrupt then homeowners will still be stuck.

I assume one way or another the federal government will bail them out. How many electoral votes does Florida have?

The bigger question is what happens next?

If $4,000 of annual premium is grossly insufficient will the state allow $8,000 premiums? Will the state just become the insurer? Will they just let all of the existing insurers go bankrupt so a new group will swoop in?

This was all very predictable for decades, unfortunately.

If you’ve ever written insurance in Florida, it’s hard to get out of the state. So every other state is subsidizing Florida hurricanes.

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That being said, this sounds fraudulent

Instead, Lee and other adjusters contracted by regional insurance carriers say that managers have been changing their work by lowering totals, rewriting descriptions of damage and deleting accompanying photos without their approval. These actions to devalue damage are the latest example of [the insurance crisis in Florida].

Oh, it’s regional carriers. Shit, don’t buy insurance from a company too small to pay out claims.

Florida’s insurance market has been teetering toward collapse for years. After destructive storms in 2005, several big carriers including State Farm pulled back coverage in the state, and newer, more thinly financed, smaller companies swooped in and began to operate.

Maybe Florida should let insurance companies charge a viable premium in the state.


Who is the reinsurer here? (not 100% up to date on FL market)

Or is this reinsured via a public program as no reinsurer wants to take on the risk.

Well, there’s always Citizens, which isn’t allowed to charge adequate rates…except that if you get a “takeout” offer from one of the new regional carriers, you lose eligibility for Citizens.

Florida is a mess. I wouldn’t want to willingly write any rate-regulated P&C product in that state.

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Typically, a carrier will have several reinsurers, via treaty and facultative contracts. So there are probably multiple reinsurers on each of those primary carriers. I’ve never heard of the companies mentioned in the article, fwiw. I think they really are small regional companies that stepped in as the national carriers have been slowly exiting the state. (And it’s only slow because of regulatory issues. My first p&c employer had exited all of personal lines, but still had to renew a lot of policies in FL and i think NY. No one wants to write Florida homeowners insurance.)

I think that’s all that’s left in Florida since State Farm pulled out. SF left because the Insurance Department wouldn’t approve adequate rates … IIRC they were losing money in Florida even in non-hurricane years. And they couldn’t get rate filings approved so they took their ball and went home.

The regional carriers will go bankrupt and the federal government will have to bail out homeowners. Which they will because… how many electoral votes are in Florida?

As I said, all very predictable.

There was a whole thread on AO predicting precisely this, BTW. (Thanks DW Simpson.)

I only knew this was inevitable because I read the thread and remember it. As a citizen of these United States it made my blood boil because the Florida insurance commissioner is going to cost me a lot of money.

I agree with what Lucy wrote, but there’s an additional wrinkle in FL reinsurance: All carriers are required to participate in the FL Hurricane Catastrophe Fund. FHCF covers $17B excess of $8.2B. It operates like a reinsurer, except for charging a fraction of what private reinsurance does and putting the risk on taxpayers instead.

This of course is on top of the state operated Citizens being the biggest primary insurer in the state.


Yes, i meant to come back and mention that there’s a state guarantee fund, that doesn’t collect anything like enough premium, but has the power of the state to tax the industry or anyone else to make up the difference. And twig is right that Florida also has leverage to get the Feds to bail them out.

My friend in central Florida is also peeved that his state’s regulation make it very hard for him to buy insurance, even though he’s 100 miles from the coast and would be insurable in a less broken market.

Minor language nitpick: the FHCF is separate from the state guaranty fund (FIGA). FIGA has had a bunch of work due to the number of insolvent FL carriers. A surcharge is imposed on policyholders of solvent companies to cover the insolvent ones.


In casual speach, i think those are both guarantee funds. But yes, nit picked. :grinning:

I can empathize, but can’t wind damage go 100 miles inland?

Yes, but it probably wouldn’t rise to the level of “widespread devastation” that drives the big cat risk aggregation numbers that give risk management indigestion.


If people want to live in Florida they should just pay more to insure their homes, in the same way people pay more to live in Manhattan just because it’s Manhattan.


Yes, that’s obviously what should happen but the Florida regulators won’t allow it to happen.

Exactly. They actually visited us about a year ago when they had a hurricane evacuation order. But they went home to no damage, and the free market unregulated cost of hurricane insurance where they live would not be prohibitive.

Im struggling to think of any location in florida that would be 100 miles inland.


Good call: it’s about 160 miles wide below the panhandle, so literally the entire state is less than 100 miles from the ocean. (The panhandle is only about 25 miles high.)

You could certainly be 100 miles from the east coast, but Tampa gets its fair share of hurricanes on the west coast. Not as many as Miami, but a lot. So yeah, I think Lucy’s statement is impossible. At least as the crow flies, which is what matters when discussing hurricanes.

That said, 80 miles inland is presumably much lower risk than Key West.