According to Fitch Ratings, the 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.
The rating agency suggests that losses will resonate through the primary and assumed reinsurance markets with expectations of sharp changes in pricing and underwriting terms. Alongside this, the future primary market capacity and reinsurer risk appetite will grow increasingly uncertain.
Fitch notes that 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.
Further, 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 million and $73 billion, with economic losses from the event likely exceeding $100 billion.
Meanwhile, Fitch observes that losses from November’s Hurricane Nicole will incrementally compound this total with insured loss estimates of between $1 billion and $2 billion.
The rating agency writes, “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.”
For now, incurred loss information on Ian continues to accumulate as insurers report estimated losses in third-quarter results.
According to the Swiss Re Institute, Hurricane Ian, alongside the winter storms in Europe, flooding in Australia and South Africa, and hailstorms in France and the US, have resulted in an estimated $115 billion of natural catastrophe insured losses this year to date.
Fitch adds that a compilation of reported net losses for 42 individual entities currently totals approximately $30 billion, with over 40% associated with state-sponsored entities Citizens and the Florida Hurricane Catastrophe Fund.