Hurricane Ian is one of the strongest hurricanes that make landfall in the United States, subjecting the region to strong winds, storm surges, heavy rain and flooding. On September 27 2022, Ian made its initial landfall as a Category 3 storm in Cuba and was strengthened to a Category 4 storm as it made landfall west of Fort Myers, Florida, on September 28, 2022. It is the US' second largest hurricane loss event on record, after Hurricane Katrina in 2005. The damage caused by Hurricane Ian, according to Stonybrook Capital, will lead to the largest-ever insured loss occurrence in terms of nominal amounts.

 

According to Scientific American, many retirees invest their savings into real estate such as houses and condos where Hurricane Ian may have destroyed their financial security in the parts of southwestern Florida that Hurricane Ian severely damaged. From the initial modeling from CoreLogic, total property losses from wind and flood caused by Ian is at between $40 billion and $70 billion where roughly 600,000 Florida homes experienced winds powerful enough to flatten a house.

 

Standard homeowner's insurance does not cover flood damage, and according to research firm CoreLogic, the total loss of flood that is not covered by insurance policies would be from $10 to $17 billion. Despite the occurrence of devastating flood events increasing, the percentage of people nationwide who hold flood insurance coverage is declining. The number of policies maintained by the National Flood Insurance Program has declined by nearly 700,000 since 2008, according to data acquired from the federal agency, according to NBC News. David Maurstad, the senior executive of the National Flood Insurance Program, said that the drop in policyholders is influenced by many factors such as the economic impact of the pandemic, the housing market, affordability, or purchasing flood insurance from the private market.

 

A report from the Insurance Information Institute shows that the annual cost of a Florida home insurance premiums is almost three times higher than the U.S. average, which is $4321 due to high hurricane risk as well as abundant litigation and fraudulent roof replacement schemes. Florida’s insurance premium renewals increased by a third on average and the premiums are expected to increase by up to a half next year. 

 

Many of Florida’s insurers rely greatly on reinsurers that secure them for claims exceeding their cash reserves. Several property insurers claim that they expect reinsurers to borne the majority of the expenses. Allstate said it expects to recoup 45% of its $671 million losses from reinsurance and Progressive said that $1.2 billion of its $1.4 billion losses would be absorbed by reinsurers. However, according to Mark Friedlander, communications director of the Insurance Information Institute, many reinsurers indicated they may no longer provide coverage to Florida insurers or will charge extremely high renewal rates. Bankers Insurance Group and Lexington Insurance Company had announced that they were withdrawing from Florida’s market before the hurricane. And according to the report from CBS News on 26 September 2022, six Florida property insurers have declared insolvency this year.

 

Credit rating agency Moody’s warned that reinsurers will face great losses due to Ian and Some entities already issued preliminary statements on the expected insured losses. Swiss Re claims that it expects $1.3 billion in insurance claims and forecasts a third-quarter net loss of $500 million caused by Ian. While for Citizens Property Insurance Corporation, the estimated loss due to Ian is $2.6 billion. However, Aon claimed that due to the amount of time required for damage assessment and loss liquidation, it is still too early to establish a specific figure, the final losses will also be affected by various factors such as demand surge and inflation.

 

Ian had dealt a major blow to Florida's insurance market, which was already unstable due to its litigious environment. It is also anticipated to be the costliest weather event for the year, and potentially one of the costliest insured loss events on record globally.