Florida Insurance Industry Ready for Upcoming Hurricane Season
The 2015 Atlantic hurricane season, which opened yesterday, and a combination of a forecast for fewer-than-average storms and the highest level ever of financial resources on hand in Florida to pay claims may help homeowners and businesses there weather fears of a storm. Florida, the riskiest place in the United States for hurricane strikes, has had nine hurricane-free years, allowing state insurers to build up record capital reserves. But that lucky streak could end at any time depending on Mother Nature.
U.S. government forecasters predict another below-normal 2015 season, with six to 11 tropical storms, three to six reaching hurricane status of 74-mile-per-hour (120 kph) winds, due to cooler seas and a strong El Niño effect.
Florida officials report some of the strongest financial reserves since the 2004 and 2005 seasons when a rare string of five major hurricanes resulted in billions of dollars in losses. The state-run Citizens Property Insurance Company, which became the largest insurance carrier in Florida after 2005, has reduced its number of policies to 592,000, about 1 million less than its peak in 2012. It says it now has $7.4 billion in reserves, the highest level since its creation in 2002. Over the years the state’s Hurricane Catastrophe Fund has also built up its reserves to a record $17 billion, said Jack Nicholson, the fund’s chief operating officer.
Most homeowners are insured through relatively new Florida-based insurance companies that opened after most major national carriers left the state following Andrew and the 2004-2005 seasons. Weiss senior analyst Gavin Magor said preliminary results of 2014 insurance data indicate Florida insurance carriers continue to strengthen incrementally with each hurricane-free year.
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