According to financial-rating agency AM Best, Hurricane Milton poses a major threat to Florida’s property insurance market, particularly for insurers specializing in the state. As the storm approaches heavily populated Gulf Coast areas, expected to make landfall early Thursday, its impact comes just weeks after Hurricane Helene inflicted significant damage across Florida and beyond.
While Helene primarily caused flooding, which isn’t typically covered by standard property insurance policies, Milton is forecasted to bring severe wind and flood damage, amplifying concerns for the insurance sector. This heightened risk could strain reinsurance—the safety net for insurers—and reduce their surplus, a financial buffer for absorbing losses.
The AM Best analysis indicates that the damage from Milton could surpass that of Helene, with a significant portion occurring in Florida. Large, diversified insurers may weather the storm as an earnings challenge, depending on Milton’s intensity and location. However, property insurers heavily concentrated in Florida could face substantial losses, impacting the availability and affordability of insurance across the state.
Currently classified as a Category 4 hurricane with maximum sustained winds of 145 mph, Milton is about 160 miles southwest of Tampa. The storm’s projected path raises alarms, with Florida CFO Jimmy Patronis estimating insured losses could reach between $10 billion and $20 billion, though he remains optimistic about insurers’ preparedness to manage the financial impact. “The carriers in Florida have raised capital to handle the storm,” Patronis noted, highlighting the arrival of nine new insurance companies in the state.
Despite some positive trends in Florida’s private property insurance sector over the past year, AM Best’s analysis underscores the reliance on “Florida specialists” for property insurance. Unlike national carriers with broader operations, these specialists depend heavily on reinsurance to mitigate financial risks.
The impending storm is expected to disrupt any ongoing softening in the property reinsurance market. Insurers may be forced to use significant amounts of cash to cover claims, which could further limit their capacity to write new policies.
The analysis also highlights that debris left from previous storms could exacerbate the destruction caused by Milton, turning remnants into projectiles that increase damage during the hurricane. The combination of ongoing recovery from Hurricanes Debby and Helene, along with the impending threat of Milton, adds urgency to the situation for homeowners and insurers alike.
