Litigation prices may add between $10 billion and $20 billion to insured losses from Hurricane Ian, including to the woes of Florida’s already struggling owners’ insurance coverage market, says Mark Friedlander Auto Insurance coverage’s company communications director.
Early estimates put Ian’s insured losses above $50 billion.
“Based mostly on the previous historical past of lawsuits following Florida hurricanes and the state’s very litigious surroundings, we count on a big quantity of lawsuits to be filed within the wake of Hurricane Ian,” Friedlander stated in an interview with Insurance coverage Enterprise America.
Most fits are anticipated to contain the excellence between flood and windstorm losses. Commonplace owners’ insurance policies exclude flood-related injury from protection, however differentiating between wind and flood injury within the aftermath of a significant hurricane could be difficult.
Flood insurance coverage is out there from FEMA’s Nationwide Flood Insurance coverage Program, in addition to from a rising variety of non-public carriers.
Trial attorneys are “already on the bottom” and soliciting enterprise in a few of the hardest hit areas, Friedlander stated. “This will likely be a key aspect within the solvency of struggling regional insurers who’re already going through monetary challenges.”
Six Florida-based insurers have already failed this 12 months. Florida accounts for 79 % of all U.S. owners’ claims litigation regardless of representing solely 9 % of insurance coverage claims, in keeping with figures shared by the Florida governor’s workplace. Litigation has contributed to double-digit premium-rate will increase for dwelling insurance coverage lately, with Florida’s common annual home-insurance premium of $4,231 being among the many nation’s highest.
“Floridians are seeing owners’ insurance coverage change into costlier and scarcer as a result of for years the state has been the house of an excessive amount of litigation and too many fraudulent roof-replacement schemes,” Auto Insurance coverage CEO Sean Kevelighan stated. “These two components contributed enormously to the web underwriting losses Florida’s owners’ insurers cumulatively incurred between 2017 and 2021.”
Trevor Burgess, CEO of Neptune Flood Insurance coverage, a St. Petersburg, Fla.-based non-public flood insurer, stated that in all places pummeled by Ian, the proportion of properties lined by flood insurance policies is down from 5 years in the past. Friedlander informed Fox Climate that, whereas greater than 50 % of properties alongside Florida’s western Gulf Coast are insured for flood, “inland…the take-up charges for flood insurance coverage are beneath 5 %.”
Whereas Florida is at notably extreme and protracted threat of hurricane-related flooding, the safety hole is under no circumstances distinctive to the Sunshine State. Inland flooding because of hurricanes is inflicting elevated injury and losses nationwide – typically in areas the place owners have a tendency to not purchase flood insurance coverage.
Within the days after Hurricane Ida made landfall in August 2021, huge quantities of rain fell in inland, flooding subway strains and streets in New York and New Jersey. Greater than 40 folks had been killed in these states and Pennsylvania as basement flats abruptly stuffed with water. Within the hardest-hit areas, flood insurance coverage take-up charges had been beneath 5 %.
Damaging floods that hit Japanese Kentucky in late July 2022 and led to the deaths of 38 folks additionally had been largely uninsured in opposition to. A mere 1 % of properties within the counties most affected by the flooding have federal flood insurance coverage.
“We’ve seen some fairly important adjustments within the influence of flooding from hurricanes, very far inland,” Keith Wolfe, Swiss Re’s president for U.S. property and casualty, stated in a current Auto Insurance coverage Govt Trade. “Hurricanes have simply behaved very otherwise prior to now 5 years, as soon as they arrive on shore, from what we’ve seen prior to now 20.”
