In the wake of Hurricane Idalia’s recent impact on the coast, the property insurance sector finds relief in the storm’s less populated landfall. However, regulators are signaling the importance of addressing the 10,000+ claims emerging from the affected area.
Insurance agents in Florida’s Big Bend region, the hardest-hit zone, commend these efforts and urge insurance carriers to remember the small-town homeowners and businesses bearing the brunt of the storm.
“It couldn’t have landed in a more favorable spot in terms of industry losses. But there’s still considerable damage in Taylor and Madison counties,” remarked Jeffrey Rush, a commercial lines agent at George Odiorne Insurance Agency in Live Oak, Florida.
Although his own house remained unscathed, a pine tree Rush planted in 1988 was toppled by the storm.
“The coastal areas, especially Horseshoe Beach and Suwannee, suffered severe damage,” noted Todd Bryant, senior vice president at Nature Coast Insurance, an agency with three offices in the affected area.
He likened the surge to the infamous “Storm of the Century,” which inundated parts of the South in March 1993.
While Hurricane Idalia may not be a historic storm, state officials are taking it seriously. Florida Insurance Commissioner Michael Yaworsky issued an emergency order, providing insured individuals with a two-month grace period on policy cancellations and nonrenewals. According to the order, all cancellation notices sent within ten days prior to September 1 must be withdrawn and reissued after October 31.
Yaworsky stated, “In the coming weeks, OIR will work tirelessly to support policyholders in affected areas and continue our efforts to promote a robust insurance market for consumers.”
Florida’s Department of Financial Services, encompassing the OIR, hastily established insurance villages in Perry and Fanning Springs to aid insured individuals with claims. An email from DFS’ Greg Thomas informed insurers that these locations would be outdoors and without power, urging them to bring appropriate equipment.
Insurance villages, with tents and tables for claims processing, have become customary after hurricanes. However, Friday’s announcement came with minimal notice, catching some insurers off guard. An executive even speculated that Florida CFO Jimmy Patronis might have expedited the timetable due to U.S. President Joe Biden’s scheduled visit to the flood-affected area.
Florida insurers are now under increased scrutiny and facing new reporting requirements following the enactment of the Insurer Accountability Act this year. This law was passed in response to allegations by three independent adjusters that several carriers and their claims firms had improperly altered damage estimates from Hurricane Ian and other storms. Insurers are now obligated to adhere to industry best practices and follow their own claims handling manuals.
As of September 6, almost a week after Hurricane Idalia’s landfall, the OIR reported over 14,244 claims filed. Approximately 69% of these claims were related to residential properties. Out of these, 850 had been closed with payment, while 896 were closed without payment.
In comparison, OIR had documented 739,771 claims from the powerful Hurricane Ian the previous year, with over half of them closed with payments by the end of June.
Many of the Idalia claims are anticipated to be flood-related, even though only a fraction of homes and businesses in the Big Bend region had flood coverage before the storm struck. RMS, a part of Moody’s Investment Service, estimated losses to the National Flood Insurance Program at around $500 million.
John Gragson, senior vice president of claims operations for Sedgwick, a national claims management firm, explained, “There’s a lot of flooding in that area from the storm surge.” The firm had adjusters on the ground, working for property insurers, in Florida, Georgia, and South Carolina.
However, Gragson noted that the wind field was not as extensive as expected.
Others in the region agreed that the insurance industry had largely dodged a bullet, thanks to the storm’s path and reduced wind speeds as it traversed the three coastal states. The South Carolina Wind and Hail Underwriting Association, which writes residential property in coastal counties, reported just two claims so far.
Insurers in the Carolinas were “all breathing a sigh of relief” and counting their blessings, according to Russ Dubisky, an official with the South Carolina Insurance Association and the Insurance Federation of North Carolina.
Coastal Georgia also faced relatively minor claims after Hurricane Idalia passed through.
“Every claim we’ve seen so far is from trees falling on roofs or on vehicles,” said Renata Lee, an agent in Waycross, Georgia.
Citizens Property Insurance Corp., the state-created insurer of last resort, may face the most losses among wind insurers in Florida. While the carrier had not released an estimate of losses by Sunday evening, it is expected to do so early this week.
The big question on many minds is whether Idalia’s claims will deplete Citizens’ $420 million surplus in its Personal Lines Account, potentially necessitating an assessment on policyholders.
Charles Nyce, an associate professor of risk management and insurance at Florida State University, commented, “It depends on where the Citizens losses fall, but I would think they could see close to that.”
With or without a Citizens surcharge, Idalia’s damage could impact Florida premiums for several insurers with losses in the next 12 months. This might lead more property owners to consider going without coverage or opting for larger deductibles, some as high as $25,000, according to USA Today and The Messenger business news site.
