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Premiums skyrocket after 4 hurricanes in 4 years

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Average homeowner premium up nearly 60% since 2019

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Price hikes by reinsurers will apply more pressure, Fitch

says

By Michelle Conlin and Matt Tracy

NEW YORK/WASHINGTON, Oct 17 (Reuters) - For 32 years,

Jim Tynan had a homeowners' policy with Allstate on his

1,200-square foot condo in Ponte Vedra, Florida.

In January, Tynan's Allstate subsidiary told him it was going

to drop him. Tynan called ten different agencies, "and none

would cover me," he said.

Finally, he found one that would. It cost 50% more.

Florida has been hit with four major hurricanes in the past

four years, which has sent insurance premiums rocketing and

caused some insurers to pull back on coverage. For residents

cleaning up after storms or living nearby water, they have

another worry: Will they still have insurance?

Tynan said he has not been hit directly by a hurricane but

is two miles from the ocean.

"I live in fear I will get a letter from my new company

telling me they are going to drop me, too," said Tynan, speaking

after the latest hurricane. "It's very scary."

Six other homeowners contacted by Reuters in areas including

both Florida coasts and the Keys also said they were worried

that the back-to-back hurricanes would result in more price

hikes and exclusions. Worse, they feared they could lose their

insurance altogether.

Allstate said it worked with regulators to protect as many

customers as possible. For those that it cannot cover, "We work

with other carriers to offer alternative coverage offerings."

A number of homeowners in Florida have faced a precarious

situation for securing insurance. Average homeowner premiums in

Florida surged nearly 60% between 2019 and 2023. Some major

insurance providers have reduced coverage. The state insurer,

Citizens, meanwhile has taken on increased business.

Analysts and insurance experts predict more nervousness

about insurers following Hurricane Milton, which made landfall

on Florida's Southwest coast just 12 days after Hurricane Helene

made landfall on Florida's Northwest coast.

"This is ...certainly going to cause insurers to be

concerned about continuing to insure in the market," said Marc

Ragin, associate professor of risk management and insurance in

the Terry College of Business at the University of Georgia.

The increased hurricanes could increase reliance on the

state-backed nonprofit insurer Citizens, considered the insurer

of last resort.

Florida's Governor Ron DeSantis has in the past raised

questions about how the insurer could pay claims if large storms

hit. Citizens spokesperson Michael Peltier said it would always

be able to pay as it was structured to first levy surcharges on

policyholders and then, if needed, assessments on

non-policyholders. He said about 80,000 claims came in so far

related to Milton and it expected to be able to pay them all

without having to levy assessments on non-Citizens

policyholders.

DeSantis' office said on Wednesday that while Citizens

will always have the ability to pay claims "this comes at the

expense of all Florida insurance policy holders."

Citizens had over 1.2 million policies in force as of

June, according to data from the Florida Office of Insurance

Regulation (FLOIR), up from roughly 1.14 million policies at the

end of 2022.

"We could see a scenario where Citizens again has to take on

a lot of policies," said Chai Gohil, global insurance analyst at

investment management firm Neuberger Berman.

INSURANCE WORRIES

The storms, in close succession, intensified concerns

about higher prices.

"The hope of a softer market I think just disappeared after

Helene and Milton," Orion180 founder and CEO Ken Gregg told

Reuters in a written statement. Gregg added that Milton would

have an impact on the reinsurance market for the next season "in

capacity and pricing."

Brian Schneider, Fitch Ratings' senior director of

insurance, said price hikes by reinsurers pushes "a lot of the

primary insurance companies, particularly on the commercial

side, to have to increase their pricing that they charge on the

property business."

Florida's insurance market is made up of a mix of major

established players, newer entrants and Citizens.

In addition, a number of insurers, including Orion180

Insurance, are taking on existing policies from Citizens in a

"Depopulation Program" to shift policyholders to private

insurers. Citizens spokesperson Michael Peltier said it aims to

reduce its policies in force to below one million by the end of

2024.

Despite the massive storms, a number of private insurers

said they remained committed to the market.

The largest include State Farm Florida Insurance and

Universal Property & Casualty Insurance, according to the

Florida Office of Insurance Regulation (FLOIR).

"State Farm plans to continue our presence in the Florida

insurance marketplace," a company spokesperson told Reuters.

Universal Property & Casualty Insurance chief strategy

officer Arash Soleimani said the company is "firmly committed"

to Florida. "Nothing that's happened this year has been outside

our modeled expectations."

Security First Insurance, a Florida-focused insurer, also

said it remained committed to the market.

"Another hurricane like Milton for Security First would be

an earnings event, not a capital event," CEO Locke Burt told

Reuters.

Of those that pulled back, many retain some exposure.

Progressive began reducing exposure in mid-2022 to focus on

states with less catastrophe exposure, although a Progressive

spokesperson said it continues to write property business in the

state.

In 2023, Farmers Insurance exited its own-branded coverage

in the state. A Farmers spokesperson said it continues to serve

customers through its Bristol West and Foremost brands.

Travelers has avoided underwriting in Florida due to the

weather-related risk there, Travelers president of personal

insurance Michael Klein said on an April earnings call. The

company did not respond to a request for comment.

"I think that while Milton and Helene are back-to-back gut

punches for the state of Florida, large insurers are in a great

position to pay claims," said Michael Carlson, president and CEO

of the Personal Insurance Federation of Florida which represents

large insurers in the state and doesn't see large players

leaving.

For homeowners, however, the worries mount.

"The reality is we may be forced out of our home where we

have lived for 35 years," said Sherri Hansen, who lives in the

Florida Keys. "All our eggs are in this one basket."