South Florida might be spared a direct hit from Hurricane Ian, but insurance customers in the region and throughout the state could be stuck helping to pay the bill if the storm causes severe damage along its ultimate path.
While it’s still early to project exactly how much damage it’s going to create, industry analysts have been studying computer models and trying to predict how much the storm is going to cost.
Before the storm’s landfall near Fort Myers on Wednesday, some estimates ranged between $17 billion and $30 billion in insured wind damage and between $2 billion and $2.5 billion in flood damage. Hurricane Irma, by contrast, caused $32 billion in insured losses in 2017, Reinsurance News reported.
With Ian’s recorded wind speeds intensifying to near-Category 5 strength before landfall, insured losses could exceed earlier estimates.
“The storm is going to cause a lot of damage, insured and uninsured,” said Locke Burt, chairman and CEO of Security First Insurance Co. “The wind speed has increased and as the wind speed increases the damage amount increases exponentially.”
Ian was expected to cause widespread damage and flooding not only along its primary path, but in other areas of the state that will suffer spinoff effects such as heavy rain, flooding and tornados.
Mark Friedlander, communications director for the industry-funded Insurance Information Institute, said Ian could cause up to $35 billion in property losses, and much of it will come from flooding.
Property insurance only covers wind-driven flooding. Rising flood waters, including floods caused by storm surge, is primarily covered by the Federal Emergency Management Agency’s National Flood Insurance Program. Yet only 13% of Florida residents have flood insurance, he noted.
“Those without flood coverage will have to rely on FEMA emergency grants that would only cover a small portion of losses,” he said. “FEMA funds are not a replacement for insurance coverage.”
Ian comes at a bad time for Florida’s insurance market, which has endured five straight years of collective operating losses and was poised to lose $1 billion in 2022 even without Ian coming to the state.