MIAMI – Florida’s already volatile insurance market is set to be thrown into even more turmoil after Hurricane Ian left a path of damage through a wide swath of the state, an expert says.
Just last month, Local 10 News reported on the state of Florida’s homeowners insurance market, with multiple companies pulling out of the Sunshine State over the last year.
Many homeowners have found themselves with few options.
Experts have blamed rampant roof repair fraud and excessive litigation as two drivers of the crisis.
Local 10 News spoke with Mark Friedlander, the Florida spokesperson for the Insurance Information Institute, on Thursday, following the storm, about what homeowners should know in the wake of the destructive hurricane.
More insurers could fail
Friedlander said as of the week prior, six Florida insurers had been declared insolvent by state regulators. He said the state could see more insurers going under following Hurricane Ian.
“It would not surprise us if some of the smaller regional, struggling insurers would fail after Hurricane Ian,” Friedlander said. “Going back to Hurricane Andrew, we saw eight companies in Florida fail because of the high volume of claims.”
While there have been a lot of changes since then, he said there are still “extreme” financial pressures on smaller insurers.
Claims will be paid
Despite the fact that he expects more turmoil in the market following the devastating Category 4 storm, Friedlander tells homeowners that the most critical issue is that they file claims and get them processed as soon as possible.
He said claims will be paid.
“Even though the Florida home market is in great crisis right now, because of the litigation and claims schemes we’ve talked about in the past, homeowners insurers will pay your claim,” he said. “If there’s some reason why a homeowners insurance company can’t pay your claim, there are backstops. We have the Florida Hurricane Catastrophe Fund, which will pay claims of a company that exceeds its reserves in terms of the volume of claims and processes.”
Friedlander also points to the the Florida Insurance Guarantee Association, which will pay claims for insolvent companies.
South Florida not exempt from ripple effect
While South Florida didn’t suffer a direct hit from Hurricane Ian, Friedlander says homeowners in Miami-Dade and Broward counties will still feel the ripple effects.
He notes that there was significant tornado damage in pockets of both counties, which would also be covered under property insurance.
Related: Local 10 News has tips on how to scam-proof your home after a storm
And the barrage of claims from Ian’s direct path will impact homeowners statewide.
“Those claims impact everybody,” Friedlander said. “If you have a insurance company that was already struggling financially before Ian, it’s going to be greatly impacted by the high volume of claims from the storm. So no matter where you live in Florida, you will probably feel some impacts in terms of your insurance coverage.”
Will Ian spur change in Tallahassee?
In his interview with Local 10 News in August, Friedlander said the legislature failed to address fraud and litigation issues during last May’s special session on property insurance reform.
We asked him whether Ian will bring added urgency for policymakers to solve the crisis.
“We are hopeful that the next legislative session will put a stop to these rampant claim schemes and the litigious environment here in Florida,” Friedlander said.
He said the market needs stability, but said the next opportunity to address the crisis will likely be during the next legislative session in 2023.
“We cannot continue this downward spiral of companies struggling and eventually failing, it will come to a point where Floridians have virtually no choice for insurance and we don’t want to go there,” Friedlander said. “So it needs to be addressed as quickly as possible.”
The bottom line
Don’t panic, Friedlander says.
“I think the important takeaway is: If you have any type of storm loss from Hurricane Ian, file your claim as soon as possible to begin the process, so that a claim adjuster could be assigned and you could begin the road to recovery,” he said.
He adds: “Don’t be concerned. Don’t be concerned about the financial health of your insurer. Your claim will be paid regardless of whether your insurer survives or unfortunately doesn’t survive and because of the effective backstops that are in place in the state of Florida.”