Florida’s Insurance Market Struggles as Residents Confront Hurricane Milton

Florida’s already strained insurance market is still reeling from the destruction of Hurricane Helene, and is now due to face further pressure with Hurricane Milton barreling toward the state.

Mark Friedlander, the director of corporate communications at the Insurance Information Institute (Triple-I), told Newsweek that Hurricane Milton is set to be even more burdensome for insurers than Helene.

Friedlander said that based on current forecasts, Milton will likely be a “much larger windstorm loss event” than the last three landfall Florida hurricanes combined—Idalia in 2023 and Debby and Helene this year.

Damage caused by winds is generally covered by property insurance, while damage caused by flooding is covered by a flood insurance policy.

Florida homeowners are already paying the highest insurance premiums in the country. Homeowners in the state paid an average annual premium of $11,163 as of July 2024, according to data shared with Newsweek by the virtual insurance company Insurify. The national average premium at this time was $2,435 per year.

These premiums have skyrocketed partly because of Florida’s increased risk of natural disasters.

Damaged homes in an area affected by Hurricane Helene in Keaton Beach, Florida, on October 3, 2024. Florida’s insurance market is now bracing for further pressure with Hurricane Milton barreling toward the state.
Damaged homes in an area affected by Hurricane Helene in Keaton Beach, Florida, on October 3, 2024. Florida’s insurance market is now bracing for further pressure with Hurricane Milton barreling toward the state.
MANDEL NGAN/AFP via Getty Images

The extent of the damage caused by Helene is still unclear, with insured loss estimates widely varying.

Despite its status as a Category 4 hurricane, Friedlander said that Helene was a “moderate loss event” for Florida home insurers, with an estimated loss of $1 billion to $2 billion.

He said that much of the damage caused by Helene was caused by storm surge and riverine flooding rather than wind. This is a problem for homeowners, as more than 95% of homes in Hurricane Helene’s path did not have flood insurance policies, according to The Wall Street Journal.

Other estimates put the property damage from Helene higher. John Neal, chief executive of the Lloyd’s of London insurance marketplace, told The Wall Street Journal that the insured loss will likely be around $5 billion to $15 billion.

The delineation between what classifies as flood or wind damage is not always clear, and disagreements between homeowners and insurance can result in legal disputes.

Homeowners filing claims in the wake of Helene and Milton also may face challenges as insurers have in recent years reduced coverage, raised deductibles, and tightened policy terms to offset growing financial pressures from rising natural disasters and underwriting losses.

Because of these higher deductibles for things like wind damage, homeowners with minor losses may now find that these are not covered.

Two natural disasters back-to-back will undoubtedly put further pressure on Florida’s already fragile insurance market.

“With Hurricane Milton, insurers’ claims teams that may already be taxed after Helene will be under further stress,” Betsy Stella, the vice president of carrier management and operations at Insurify, told Newsweek.

She added: “Insurers are hoping that they priced premiums to match this season’s risk. However, it will be some time before they will know if that is the case. What we do know is the market will be affected by inflated pricing of replacement materials, as well as by storm-chasing contractors, and fraud. All of this will likely drive up claim costs and could increase premiums in the future.”

Friedlander has a less pessimistic view. He told Newsweek that the Florida property insurance industry is “well-positioned to act as financial first responders” to its customers impacted by Hurricane Milton this week.

“The market is in its best financial condition in many years due to state legislative reforms in 2022 and 2023 that addressed the man-made factors which caused the Florida risk crisis—legal system abuse and claim fraud,” he said.

Erin Collins, the senior vice president of state and policy affairs for the National Association of Mutual Insurance Companies, told Newsweek: “While Milton is expected to make landfall as a major hurricane, it’s too early to tell the financial toll it will take. Coming on the heels of Helene, new damage may place additional stress on the regional market for repairs.

“Since states like Florida can face multiple hurricanes in one season and many coastal communities continue growing, it underscores the urgency of strengthening state insurance markets.”

It remains to be seen how the market will cope with the double blow of two consecutive hurricanes, as insurers are likely to face an influx of claims, and homeowners may find their insurance coverage is insufficient or see their premiums rise even further in the future.

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