Hurricane Milton could cause ‘double-digit billion-dollar’ losses in Florida, insurers warn

Hurricane Milton's destructive path across Florida may not have been as catastrophic as initially feared, but it still could disrupt the state’s insurance market, which is already a political flashpoint in the nation’s third-largest state.

The storm’s path took it south of the vulnerable Tampa Bay region, but it spawned deadly tornadoes and brought powerful winds to a wide swath of the state. Over 1.5 million remained without power on Saturday, and the storm had been blamed for at least 17 deaths . Officials fear that heavy rainfall associated with the storm will lead to flooding along several rivers in the coming days.

The initial expectation is that many private insurers will be able to absorb the losses brought by Milton. But the cumulative one-two punch of first Hurricane Helene two weeks ago followed by Milton could result in significant enough damages that it washes away the progress in stabilizing the insurance market frequently cited by Gov. Ron DeSantis and top Republicans.

Mark Friedlander with the Insurance Information Institute, an industry association, said insurers are still awaiting loss estimates, which are expected to be significant.

“We anticipate Hurricane Milton will be a double-digit billion-dollar loss event and the largest insured loss for any U.S. natural catastrophe in 2024,” Friedlander said. “However, we don’t expect Milton will reach the level of Hurricane Ian in 2022, which we estimated as a $50 billion to $60 billion insured loss. Ian is the second-largest U.S. natural catastrophe loss on record behind Hurricane Katrina.”

The numbers are just beginning to trickle in from Milton. Florida insurance regulators said insurers had already reported more than $586 million in losses from nearly 44,000 claims.

Florida’s insurance market nearly collapsed just a few years ago due to a combination of factors, including a series of storms as well as what insurers called excessive lawsuits against them. Some insurers went bankrupt while others scaled back coverage and enacted double-digit rate hikes. Florida now has the highest homeowner’s insurance premiums in the nation.

The state used taxpayer money to provide backup financial help for insurers operating in Florida. In late 2022, shortly after Ian hit, DeSantis and legislators put in place new restrictions on lawsuits against insurers.

Many Democrats opposed the changes, and even former President Donald Trump cast them as a bailout for insurance companies. But top state officials said the changes resulted this year in many companies either slightly decreasing their rates or keeping them steady.

Then the storms hit. Several forecasts from rating agencies and investment analysts, including one released on Thursday by Moody’s, are predicting the losses could prompt large global reinsurance companies — which offer backup financing in case of major losses — to raise their rates in 2025. Insurers, especially those who operate solely in Florida and can’t spread their risk elsewhere, rely on private reinsurers as well as the state-created Florida Hurricane Catastrophe Fund for backup financing. Those higher costs then get passed on to consumers.

“They are going to use any opportunity of a ‘what if factor’ to justify being manipulative over the process,” said Chief Financial Officer Jimmy Patronis, a Republican and an elected state official who plays a role in helping regulate the insurance industry.

Patronis says he knows Floridians are “frustrated,” but he has been bullish on the changes made by the state in recent years and said several companies have entered the market in the past year.

“We would not be getting nine more companies if we were not doing something right,” he said.

Florida voters have already said in recent polls that insurance remains a top-tier issue, and it remains one of the main criticisms lodged against Republicans by Democrats in the state. Some political consultants have already privately predicted it could be the dominant issue of the 2026 elections when voters will pick a new governor.

A big looming question that remains from Milton is how it will affect the state-created insurer of last resort known as Citizens Property Insurance, as well as the Florida Hurricane Catastrophe Fund — or “Cat Fund” as it is called. Both have been set up over the past three decades to bolster Florida’s insurance market.

In its analysis released on Thursday, credit analysts for S&P Global Ratings noted that “Florida also has long-standing mechanisms in place to help stabilize the property insurance market in light of its inherent exposure to natural disasters.” But the analysis added “that the frequency of higher-cost events could strain individuals’ insurance premiums, resulting in increasing unaffordability over time.”

Citizens has significant exposure, and hundreds of thousands of policies along the Gulf Coast where the storm made landfall. If Citizens exhausts its reserves and has to borrow money it can then place a surcharge, labeled a “hurricane tax” by critics, onto most insurance policies in the state, even those for cars.

A Citizens spokesperson said Friday that there have been around 12,000 claims filed so far.

All property insurers in Florida are required to purchase backup reinsurance from the “Cat Fund,” which was first set up in the aftermath of Hurricane Andrew, the deadly storm that ripped through South Florida in 1992. Once insurers reach a certain amount of payouts they can request reimbursements. The “Cat Fund” has so far paid roughly $4.75 billion for losses associated with Hurricane Ian from two years ago.

The “Cat Fund” currently has about $6 billion on hand and was projected to have more than $10 billion on hand by the end of the year. Like Citizens, it also has the ability to levy a surcharge if it were forced to borrow money.

Emily Percival, director of external affairs for the State Board of Administration, which oversees the “Cat Fund,” said they are requesting estimates about the damages, cautioning that the current ones “are not reliable indicators.” Percival added that the fund is “well positioned with projected liquid resources.”

Zack Colman contributed to this report.