Preliminary estimates of insured losses from Hurricane Idalia have brought some unexpected relief to Florida, with projections of approximately $9 billion in losses for the state. These estimates, significantly lower than initially feared, contrast sharply with the $60 billion in losses incurred by Hurricane Ian, which struck less than a year ago but targeted more densely populated areas on Florida’s southwest coast.

UBS, a multinational investment bank, has provided a range of estimates for Florida, spanning from $4 billion to $25.6 billion, with an average of $9.36 billion. This places Hurricane Idalia in a category significantly less costly for insurers compared to some of the costliest hurricanes in the United States.

BMS, a reinsurance brokerage, has pegged losses at a range of $3 billion to $6 billion, offering reassurance that this event isn’t as devastating as initially feared.

AccuWeather, a global forecast service, predicts total damage and economic losses for the Southeastern states hit by Idalia to be in the range of $18 billion to $20 billion. To provide context, Hurricane Ian, which affected a more densely populated area, resulted in total damage and economic loss of $180-210 billion.

Hurricane Idalia made landfall as a Category 3 hurricane in Florida’s Big Bend area, sparing the Tampa metro area from the worst of the wind and surge. While the storm didn’t cause catastrophic damage in the Tampa area, it arrived at a critical time for the insurance industry, coinciding with the entry of four new property-casualty insurers into the challenging Florida market.

Despite the challenges, some insurers, like Orion180 Insurance, remain confident that the market can absorb the losses. Orion180 Insurance, based in Florida, plans to continue its operations as the estimated losses in the affected areas appear manageable and covered by reinsurance.

However, concerns arise for insurers writing policies in the Big Bend area, where many structures are older and not built to the stronger construction codes required in South Florida. Security First Insurance, one of the largest carriers in the affected region, reported lighter damage than expected, with losses estimated at approximately 50% of their initial projections.

For Citizens Property Insurance Corp., which focuses on areas less densely populated, it was too early to provide an estimate. The potential for reinsurers to raise prices in response to the insured losses from Idalia could lead to Florida property-casualty insurers seeking further rate increases for their insureds.

The impact of Hurricane Idalia is expected to be primarily from flooding, with a storm surge of over 8 feet on Florida’s coast. This devastating storm is likely to result in prolonged power outages and significant recovery efforts in some parts of Florida.

As Hurricane Idalia highlights the flood insurance gap in coastal areas, efforts are being made to address this issue. While the share of federally flood-insured properties in some areas remains low, the requirement for insureds with state-run Citizens Property Insurance Corp. to purchase flood coverage is gradually phasing in, aiming to close the flood insurance gap by 2027.