Hurricane Helene hit Florida on Thursday night and is predicted to be one of the largest storms to affect the region. It could have a heavy impact on the state’s home insurance crisis, which is the highest in the country.
The Category 4 storm, headed to Florida from Mexico, originated in the Caribbean and was located southeast of Tallahassee, and an expert previously told Newsweek that flash and urban flooding is expected across portions of Florida through Friday.
Regarding the storm, Florida Governor Ron DeSantis said on Tuesday: “There’s a lot of uncertainty with this storm, but the one thing that is certain is we are going to see some impacts,” according to Fox29WFLX.
DeSantis also declared a state of emergency for 41 Florida counties, and some coastal communities have been ordered to evacuate, according to the Insurance Information Institute.
The governor has also urged residents to come up with a hurricane preparation plan and, as a result, some residents have boarded up windows, placed sandbags in their homes, and are fueling up their cars.
A GeoColor satellite image taken at 5:46 p.m. EDT showing Hurricane Helene in the Gulf of Mexico heading towards Florida on September 26. One of the largest storms to hit the region in years, the category-four storm hit near Tallahassee on Thursday night.
Uncredited, National Oceanic and Atmospheric Administration/Associated Press
The effects of the storm could also include hurricane-force winds, life-threatening storm surges, flash flooding, isolated tornadoes, and widespread power outages, according to the National Hurricane Center.
Retired insurance regulator, lawyer and author Luke Brown told Newsweek about the potential implications of Hurricane Helene on the state’s home insurance crisis.
While he noted that many larger insurance companies like State Farm can withstand major storms, smaller insurers may be in danger of closure.
Brown said: “Many of Florida’s smaller insurers could be especially in danger, as happened after past storms and other disasters that generated mass claims. Although insurers are state-regulated, including their finances, some get overwhelmed, become insolvent and go out of business, reducing the amount of available insurance.”
Brown also noted that to survive the storms financially, smaller insurers may have to raise rates to stay afloat, and, as the cost of reinsurance has increased, this has become more difficult.
He said another possibility after Hurricane Helene is that “an insurer might decide not to renew or issue new policies at all in a state or part of a state in the face of huge claims Hurricane Helene may bring because it cannot make a reasonable profit.”
Mark Friedlander, director of corporate communications at the Insurance Information Institute, was confident that Floridians’ Storm Helene home insurance claims would be paid out, however.
“The insurance industry is well-capitalized to act as financial first responders to their impacted customers and handle a high volume of storm claims from Helene,” he told Newsweek. “Florida property insurers are in their best financial position in many years due to the impacts of state legislative reform passed in 2022 and 2023.”
Friedlander continued: “They also have adequate levels of reinsurance to handle large loss events like a major hurricane. Florida homeowners can be assured that their Helene claims will be paid according to the provisions of their property insurance policy.”
Florida’s home insurance crisis has exponentially increased in the past year, as insurance premiums reached the highest in the nation and the Sunshine State had the highest share of insurers transferring risk to reinsurance companies.
WLRN attributes Florida’s growing home insurance market issue to natural disasters, which it alleges are occurring more commonly and are becoming more costly, as well as the price of reinsurance rising and Florida’s litigation-friendly environment.
Natural disasters cost the Sunshine State $5 to $10 billion annually, as reported by WLRN.
The home insurance crisis particularly affected those in South Florida last year, as average premiums were higher, and a recent study found that homeowners across the state paid more than $10,000 in an average annual premium in 2023.
The study also revealed that the state has the highest rate of reinsurance exposure, at 40 percent.
Despite high premiums in 2023, Friedlander said that the home insurance market has improved dramatically throughout this year and overcame what he described as a risk crisis caused “primarily by man-made factors of legal system abuse and claim fraud.”
He said: “Average home insurance rate filings in Florida year-to-date are averaging less than a 2 percent statewide increase, the lowest average increase in the U.S. More than three dozen Florida residential insurers have either filed for a rate reduction or no rate change this year because of the decline in incurring expenses defending frivolous lawsuits (what was addressed by the Florida Legislature). They are passing these savings along to their customers.”
While Friedlander believes it is premature to speculate how Hurricane Helene will impact future insurance rates, he said: “Based on current loss projections from catastrophe modelers, the storm should be a very manageable event for the Florida insurance industry that is primarily covered by reinsurance.”
Do you have a story we should be covering? Do you have any questions about this article? Contact LiveNews@newsweek.com.
