In September, Hurricane Hermine broke Florida’s hurricane drought that had lasted since 2005. The category 1 storm hit the Florida Panhandle, bringing significant storm surge to the Tampa Bay area before slowly traveling up the Eastern Seaboard.
The storm weakened to a tropical storm as it moved inland in Florida, with winds topping 70 miles per hour, according to the U.S. National Hurricane Center, but it was still enough to cause widespread damage and power outages. Toppled trees in Tallahassee left some residents without power for a week.
“This was a very typical CAT 1 hurricane,” said Karen Clark, CEO of catastrophe risk management firm Karen Clark & Co. (KCC). “The biggest losses [were] from trees falling on houses. There was a lot of damage in Tallahassee … there were some commercial losses, but really, the wind speeds weren’t enough to create structural damage unless a tree fell.”
Cat modeling firms, such as KCC, pegged the damage in the $1 billion range and said the claims from the storm were nothing insurers couldn’t handle.
Then in October, Hurricane Matthew hit. The storm was classified as a category 3 with winds of 120 miles per hour.
The consensus from the insurance industry was this storm also could have been a lot worse and that the state had dodged a bullet, as the destruction left behind by Matthew wasn’t as bad as what was originally anticipated. Storm experts say that’s because the storm didn’t hit land as the category 4 hurricane that impacted Haiti just a few days earlier.
“When Matthew was nearing Florida, there was a large amount of uncertainty of whether there would be more wind and storm surge or less so because the storm was paralleling so close to the coast,” said Tom Sabbatelli, RMS Hurricane Risk Expert based in the UK.
Sabbatelli said since Matthew stayed about 50 miles off the coast and the hurricane force winds remained around the center of eye the state was spared from extreme devastation. “Florida avoided the strongest of the winds,” he said.
Cat modeling firms have estimated Matthew damage at $10 billion, but, “there isn’t any concern of [Matthew] affecting the stability of the marketplace,” said William Stander, executive director for the Florida Property & Casualty Association (FPCA).
CEO and Executive Director of Citizens, Barry Gilway, said the company had more than 10 years to prepare and its efforts paid off when it came to responding to these events.
“The 2016 hurricanes, Hermine and Matthew, were a real test for Citizens and for many of the new ‘untested’ companies in Florida,” Gilway said. “My view is that our claims organization responded very effectively but more importantly the feedback we received from our customers and our agents was all very positive.”
Furthermore, he said, it addressed concerns as to whether Florida take-out companies, which had not experienced an event such as Matthew, could handle a large influx of claims.
“Those questions were answered with a resounding ‘Yes,'” Gilway said. “These companies all performed exceptionally well, clearly showing their customers they were more than prepared.”
Florida CFO Jeff Atwater and Commissioner David Altmaier hosted an “Insurance Roundtable” on Dec. 2 to mark the end of the 2016 hurricane season. Representatives from 25 different insurance companies operating in Florida were in attendance, as well as officials from the Federal Emergency Management Agency (FEMA) to discuss storm-related claims with the National Flood Insurance Program (NFIP).
“This was a hurricane season that I think we all knew was coming,” Altmaier told attendees. “There is no illusion, certainly in this room, that we’ll go another 11 years without hurricane activity.”
Altmaier praised the insurance industry for its work with OIR in the days before and after the storms, saying there wasn’t a “single insurance company I wasn’t able to get in touch with in a short period of time.”
“The responsiveness I witnessed with respect to our outreach to you and the Office’s outreach was just superb,” Altmaier told industry representatives.
OIR reported there have been more than 112,000 insurance claims totaling $729 million in losses as a result of Hurricane Matthew and 18,000 insurance claims totaling $95 million as a result of Hurricane Hermine. Altmaier said neither storm raised concerns that insurers wouldn’t be able to pay claims and it isn’t expected that either event will impact the Florida Hurricane Cat Fund.
As these insurance claims are processed, paid and closed, Atwater and Altmaier have closely followed the insurance industry’s claims-paying practices to ensure that Floridians are treated fairly and their claims are handled appropriately, OIR said in a statement.
Commissioner Altmaier said after the event that he has been encouraged by the responsiveness of the insurance industry in handling claims relating to the storms.
“We will not accept anything less than the best and most efficient effort from every single insurance company operating in the state of Florida,” said Atwater. “Commissioner Altmaier and I are pleased with what we’ve seen thus far, but we will continue to meet with residents until Floridians’ concerns have been addressed.”
The hurricanes, while not as destructive as they could have been, did serve to remind residents of the perils the catastrophic- prone state faces.
“Florida had two hurricanes this year … but from a purely technical perspective, they didn’t make landfall in Florida though they came close,” Sabbatelli said. “But, from a technical perspective Florida still hasn’t had a major hurricane since 2005. There is definitely the potential for worse.”
Each top Florida insurance topic of 2016 will be highlighted this week. Check back Thursday for the story of Florida’s new insurance commissioner and his priorities for 2017.
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