Thu | Oct 18, 2018

Hurricane Michael Aftermath | Analysts: Insurers will survive US$6b hit

Published:Sunday | October 14, 2018 | 12:00 AM
Joshua Kerigan, 19, left, crawls out of a window after retrieving some belongings with his father from their damaged house in the aftermath of hurricane Michael in Mexico Beach, yesterday.

FORT LAUDERDALE (AP):

Florida's disjointed property insurance system that relies almost exclusively on small and midsize companies will take a multibillion-dollar loss from Hurricane Michael, but has sufficient reserves and backups that providers should be able to pay claims without problems, analysts say.

Major national players like State Farm, Allstate and Liberty Mutual write few, if any, homeowners policies in Florida because of the high risk of hurricane losses, leaving the market to smaller companies and the state-created insurer of last resort, Citizens Property.

Boston-based Karen Clark & Company, which models catastrophes, estimates Florida private insurers will pay US$6 billion in claims for wind and storm surge damage to residential, commercial and industrial properties and vehicles.

The estimate doesn't include losses covered by the National Flood Insurance Program, which has about 60,000 policies in the hardest-hit Florida counties. The program had no immediate estimate on its losses.

Analysts say that despite their smaller size, Florida insurers should be able to cover their Michael losses through reinsurance policies insurance companies purchase from global companies like Lloyd's of London to cover catastrophic losses.

Most of the state's damage from last Wednesday's Category 4 storm is in the sparsely populated Panhandle, lessening the financial blow.

Florida insurers "are built to be able to withstand these types of storms that are expected to happen every 10 to 15 years", said Brian C. Schneider, a senior director at the analytics firm Fitch Ratings.