Rating Firm Says Florida Insurers Will Weather the Storms. Cat Fund Can Handle Payouts to Insurers

Florida’s Hurricane Catastrophe Fund, a state-created layer of reinsurance, expects to pay out about $4.6 billion to help cover insurers’ losses in Hurricanes Helene and Milton. But that won’t trigger a surcharge on premiums.

And a number of Florida property insurers will take a hit from the recent storms, but that, too, will be manageable.

That’s the word from the Cat Fund’s advisory council and from KBRA, the ratings firm previously known as Kroll Bond Rating Agency, which rates about 13 Florida-based carriers.

“While two major hurricanes hit Floridian shores within a two-week period, preliminary gross and net loss estimates for homeowners’ carriers indicate that full-year … earnings will be significantly reduced but are expected to remain positive, with no appreciable erosion in capital and continued near-term ratings stability,” KBRA said in a report released in late October.

Many insurance carriers in Florida, expecting a busy 2024 hurricane season, had beefed up their reinsurance coverage this year, helping to make the storms earnings events, not capital events.

“Some insurers anticipate Hurricane Helene to be a full-retention event while others anticipate limited insured losses,” KBRA analysts noted. “Most insurers expect Hurricane Milton will be a full-retention event.”

Florida-based insurers rated and tracked by KBRA include Universal Property & Casualty; First Protective Insurance/Frontline; Heritage Property & Casualty Insurance; American Traditions Insurance; Olympus Insurance; Manatee Insurance Exchange; Orange Insurance Exchange; Tower Hill insurance company and exchanges; and others.

Most of the rated carriers should be able to help offset hurricane losses due to a “very strong first half of the year,” thanks to legislative litigation reforms and higher premiums, the rating firm said.

Policyholder surplus for KBRA-tracked insurers increased by 17% from 2023 to 2024.

“Many of these companies were able to improve their surplus through underwriting profitability, a trend not seen in the recent past,” the report reads.

Meanwhile, the Florida Cat Fund estimates it will have to pay out almost $5 billion, but will have more than $7 billion in cash and another $3.25 billion in pre-event bond funds available to cover the cost, officials said.