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How will Hurricane Ian impact home insurance costs in Florida?

27 insurers already on state financial watchlist
Damaged and missing homes are seen in the wake of Hurricane Ian, Thursday, Sept. 29, 2022, in Fort Myers Beach, Fla. (AP Photo/Wilfredo Lee)
Posted at 3:51 PM, Sep 30, 2022
and last updated 2022-09-30 18:46:07-04

WEST PALM BEACH, Fla. — The estimated cost of the damage to Hurricane Ian is expected to reach into the tens of billions of dollars, and Florida's already stressed insurance industry will bear the costs.

Insurance rates have already been going up in past years in Florida, even as six companies went insolvent and another 27 are on a state financial watch list.

Now with Ian predicted to be the second costliest storm in U.S. history, many insurance experts said a lot of companies in Florida could be pushed to the brink.

"We anticipate rates will go up significantly next year," Mark Friedlander of the Insurance Information Institute said. "We're not making a prediction at this point, but based on the trend we have seen over the past several years where rates have gone up double-digit, we will see continued double-digit increases if not higher going forward."

RELATED: Here's how to help victims of Hurricane Ian

Damaged homes are seen in the wake of Hurricane Ian, Thursday, Sept. 29, 2022, on Sanibel Island, Fla.
Damaged homes are seen in the wake of Hurricane Ian, Thursday, Sept. 29, 2022, on Sanibel Island, Fla.

Robert Norberg of Arden Insurance in Lantana said those companies will be backed by the state to pay claims for Hurricane Ian. But after that, it could get dicey for policyholders statewide.

"In the initial impact, even if you didn't have a claim, it's going to take a toll on the carriers still in business, and it depends on how much they have to pay," Norberg said. "It all pushes toward the numbers growing in (Citizens Property Insurance Corporation) even more. If they can't get standard market companies, they will have to go to Citizens."

Florida's insurance industry has been plagued by litigation issues and rising reinsurance costs, which have led to many large carriers limiting policies and leaving many smaller companies financially exposed.

Citizens Insurance, the insurer of last resort, is now the dominant insurer in Florida with more than a million policies and growing.

Robert Norberg of Arden Insurance discusses impact of Hurricane Ian, Sept. 30, 2022
Robert Norberg shares how Hurricane Ian will impact home insurance premiums in Florida.

Insurance experts said Hurricane Ian will likely drive up costs — not just by the large claims — but also the rising costs for re-insurance, basically insurance for the insurance companies.

Right now, they have enough cash to cover damage from Hurricane Ian. But beyond that, Norberg said to start looking for surcharges on all insurance policies to help keep Citizens afloat.

"We're not done with hurricane season," said Friedlander, who points out Citizens would have to rely on all policyholders in the state if its cash runs out. "What if there is another significant storm this year?"