Florida Regulators Remind Insurers to Take Care of Insureds as Claims Come in

By | September 5, 2023

The property insurance industry breathed a sigh of relief after Hurricane Idalia landed in a less-populated part of the coast, but regulators have signaled a need to make sure that claims from the area, now topping 10,000, are taken care of.

Insurance agents in Florida’s Big Bend area, the hardest-hit region, are applauding those efforts, urging carriers to remember the small-town homeowners and businesses that were damaged by the storm.

Rush (Linkedin)

“It couldn’t have hit in a better spot as far as industry losses are concerned. But there’s still a lot of significant damage here in Taylor and Madison counties,” said Jeffrey Rush, a commercial lines agent in Live Oak, Florida, with the George Odiorne Insurance Agency.

The storm spared his own house but knocked down a pine tree that Rush planted in 1988.

“The coast got beat up pretty bad, Horseshoe Beach and Suwannee, especially,” said Todd Bryant, senior vice president at Nature Coast Insurance, an agency with three offices in the area.

He compared the surge to the famous “Storm of the Century,” a non-hurricane event that inundated parts of the South in March 1993.

Idalia may not be a storm for the ages, but state officials said they were taking it seriously. Florida Insurance Commissioner Michael Yaworsky on Friday issued an emergency order, giving insureds two months’ grace period on policy cancellations and nonrenewals. All cancellation notices mailed in the 10 days preceding Sept. 1 must be withdrawn and reissued after Oct. 31, the order states.

“In the coming weeks, OIR will work in overdrive to both support policyholders in impacted areas and continue our efforts to promote a robust insurance market for consumers,” Yaworsky said in a statement Friday.

Florida’s Department of Financial Services, which encompasses the OIR, also rushed to set up insurance villages Saturday morning in Perry and on Sunday in Fanning Springs, to assist insureds with claims.

Bryant (Nature Coast)

“Please be advised that these locations are outdoors and will not have power available,” reads an email from DFS’ Greg Thomas to insurers. “Please bring appropriate equipment to conduct operations in a parking lot.”

Insurance villages have become the norm after hurricanes, with tents and tables set up to handle claims processing. But Friday’s announcement came in the afternoon, giving insurers just a few hours’ notice and catching some off guard. One executive suggested that Florida CFO Jimmy Patronis may have decided to move up the timetable because U.S. President Joe Biden was due to tour the water-slogged area Saturday morning, with national media in tow.

Florida insurers are facing new scrutiny and new reporting requirements, after the state Legislature this year approved the Insurer Accountability Act. The law was passed after three independent adjusters charged that several carriers and their claims firms had inappropriately altered damage estimates from Hurricane Ian and other storms. Insurers are now required to abide by industry best practices and follow their own claims handling manuals.

As of Tuesday, Sept. 6, almost a week after the storm hit, OIR reported that more than 14,244 Idalia claims had been filed. About 69% of those were for residential property. Some 850 had already been closed with payment, while 896 were closed without payment.

By comparison, OIR has recorded 739,771 claims from last year’s powerful Hurricane Ian, with more than half of those closed with payments by the end of June this year.

Idalia Losses Could Be Under $5 Billion, Verisk, RMS Say

Many of the claims from Idalia are expected to be flood-related, although only a fraction of homes and businesses in the Big Bend region had obtained flood coverage before the storm hit, experts said. RMS, part of Moody’s Investment Service, has estimated losses to the National Flood Insurance Program to be about $500 million.

“There’s a lot of flooding in that area from the storm surge,” said John Gragson, senior vice president of claims operations for Sedgwick, the national claims management firm. The firm had adjusters on the ground, working for property insurers, in Florida, Georgia and South Carolina.

“But by and large, the wind field was not as extensive as was expected,” Gragson said.

Others in the region agreed that the industry had largely dodged a bullet, thanks to the path of the storm and reduced windspeeds as it moved across the three coastal states. A testament to that came from the South Carolina Wind and Hail Underwriting Association, which writes residential property in coastal counties.

Stephanie Foley found a photograph of her grandfather, once the town’s mayor, in the wreckage of a house that had served as a base for her father’s crabbing business until it was destroyed Wednesday in Hurricane Idalia. (AP Photo/Rebecca Blackwell)

“We’ve had just two claims, so far,” Randy Mason, claims director for the association, said Friday. “It was a lot quieter than we expected.”

Insurers in the Carolinas were “all breathing a sigh of relief,” and counting their blessings, said Russ Dubisky, an official with the South Carolina Insurance Association and the Insurance Federation of North Carolina.

Coastal Georgia was in similar shape after Idalia blew through, with relatively minor claims.

“Every claim we’ve seen so far is from trees falling on roofs or on vehicles,” said Renata Lee, an agent in Waycross, Georgia.

The wind insurer that may see the most losses in Florida is the state-created insurer of last resort, Citizens Property Insurance Corp. The carrier had not released an estimate on losses by Sunday evening, but is expected to early this week.

The big question many are asking is will Idalia’s claims cause Citizens to burn through its $420 million in surplus in its Personal Lines Account, forcing it to levy an assessment on policyholders.

“It depends on where the Citizens losses fall, but I would think they could see close to that,” said Charles Nyce, associate professor of risk management and insurance at Florida State University.

With or without a Citizens surcharge, Idalia’s damage could have at least some impact on Florida premiums — for a number of insurers with losses — in the next 12 months, perhaps prompting more property owners to go without coverage altogether. Moody’s predicted that many homeowners could opt for larger deductibles, as high as $25,000 in some situations, according to USA Today and The Messenger business news site.

Top photo: Jewell Baggett in the wreckage of her mother’s home in Horseshoe Beach, Florida, after Hurricane Idalia. (AP Photo/Rebecca Blackwell)

Topics Florida Carriers Claims Georgia South Carolina

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