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Insurance Companies Prepare For Idalia Claims, With A $9.36 Billion Cost Projection For Florida

Tropical Storm Hilary Turns Dodger Stadium into a Water Wonderland (Photo: baseball history Nut)
Tropical Storm Hilary Turns Dodger Stadium into a Water Wonderland (Photo: baseball history Nut)

Hurricane Idalia, which made landfall in Florida on Wednesday, was projected to leave insurers with claims totaling billions of dollars. This will only add to the industry’s difficult year and could lead to customers paying higher rates.

Hurricane Smashed Florida Coast

Before fading but still unleashing its fury on southeastern Georgia, where floodwaters trapped several inhabitants in their houses, Hurricane Idalia smashed onto Florida’s Gulf Coast with strong winds, torrential rain, and pounding waves.

Based on statistics as of August 28th, UBS bank predicted average insured losses in Florida to be $9.36 billion, with a 50% risk of losses exceeding $4.05 billion and a 10% likelihood of losses exceeding $25.6 billion. The wide range indicated probable adjustments to the storm’s route and intensity.

Idalia would cost insurers less than ten of the most expensive storms to strike the United States, at around $10 billion.

According to reinsurance broker Gallagher Re, nationwide reinsurance premiums for policies with natural disaster claims increased 30%–50% during renewals in July, but the increase in Florida was 30%–40%.

Insurance industry analysts have noted that Florida has a huge number of relatively small, undercapitalized insurers.

Idalia Hurricane’s Aftermath

Insurance

Source: BBC News

According to a July USA Today report, some insurance companies, including Farmers Insurance, Bankers Insurance, and Lexington Insurance, a division of AIG, have left Florida due to the possibility of significant losses.

On Wednesday, a Farmers representative said that the company had informed the Florida Office of Insurance Regulation of its decision to stop selling Farmers-branded umbrella, house, and vehicle policies in the state.

Since 2022, Citizens Property Insurance Corp, a non-profit, state-backed insurer known as a “insurer of last resort,” has increased its market share as primary insurers lessen their exposure to the Florida market, according to a note from UBS.

According to a CNBC transcript of the conversation, Ajit Jain, vice chairman of Berkshire Hathaway, stated in May that he was pleased with the reinsurance the company had written but that Berkshire had a “unbalanced portfolio” and a major Florida hurricane would result in a “very substantial loss.”

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