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Report: Hurricane Hermine should have ‘modest’ effect on insurance industry

Mon Sep 12th, 2016 on     Homeowners Insurance,    

As property owners across northern Florida continue to pick up the pieces and assess the damage wrought by Hurricane Hermine, the storm that slammed into the Panhandle a little over a week ago, questions have naturally arisen as to the size of the hit the insurance industry will take and its ability to absorb it.

Indeed, this makes sense when you consider that the Sunshine State has gone an unbelievable 11 years without a hurricane, and the fact that the insurance market has undergone a significant transformation over this timeframe, with smaller in-state homeowners insurance companies now covering 60 percent of the market.

According to a preliminary report from Fitch Ratings Inc., citing Boston-based consultancy firm Karen Clark & Co., the total amount of insured losses from Hurricane Hermine should be close to $500 million, while the total economic damage in the region should be around $1 billion.

As for the insurers who will likely end up footing the largest bill for the storm, the report identifies the following: State Farm Mutual, Citizens Property, Federated National Insurance, Tower Hill and Universal Insurance Holding Group.

Even though these understandably seem like huge figures, the report indicates that they will actually have a “modest” impact on the insurance industry, perhaps really only affecting third-quarter earnings. In other words, the report found that the insurance industry can absorb the hit such that property owners shouldn’t see premiums rise.

While this may seem like something of a surprise, remember that Hurricane Hermine was only a Category 1 storm. By comparison, consider that the price tag for Hurricane Andrew, 1992’s historic Category 5 storm, was $24 billion (adjusted for 2016 dollars).   

Here’s hoping that those property owners with hurricane damage see the claims process progress smoothly. However, in the event a dispute arises, they should strongly consider speaking with an experienced legal professional who can hold insurance companies accountable when they act unreasonably. 

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