KCC Says Isaias Insured Losses to Be $3 Billion; AM Best Calls Storm an Earnings Event
Catastrophe risk management firm Karen Clark & Co. (KCC) said privately insured losses from wind and storm surge during Hurricane Isaias will be about $3 billion, making the storm one of the most manageable for insurers in recent years.
AM Best said the Category 2 hurricane, which came ashore on the Florida Panhandle near the resort city of Destin on Oct. 9, will likely turn out to be an “earnings event” for insurers. Losses will be well below the level to make the storm a capital or solvency event, said the insurance industry rating agency.
“The hurricane is not expected to significantly deplete surplus levels in a way that alters industry-wide capacity within the state, thereby avoiding any squeeze that would otherwise lead to a pricing surge,” AM Best said.
Claims data from Florida’s Office of Insurance Regulation had not yet been released by Thursday morning.
A big factor in the storm’s impact was the unusual nature of its winds. “The strongest winds were recorded on the western side of the storm, blowing water away from the coast, limiting storm surge damage and, thus, flood losses,” AM Best noted.
Unlike most hurricanes, the strongest winds, between 105 mph and 117 mph, were recorded near the western eyewall, around Pensacola, according to weather and news reports.
Some coastal areas saw storm surge, but less than had been feared. Panama City Beach, about 90 miles east of Pensacola, saw 5.6 feet of surge, Gallagher Re reported. Inland areas from Alabama to the Carolinas endured some flooding, and 21 tornadoes were confirmed across the Southeast.
KCC, which has estimated U.S. storm losses for almost 20 years, said its insured-loss estimate for Isaias includes residential, commercial and industrial properties, and vehicles, as well as business interruption. It does not include National Flood Insurance Program losses.
The $3 billion is comparable to Hurricane Idalia, a Category 3 storm that made landfall on a less-populated part of the Florida Panhandle in 2023. Idalia brought storm surge of as much as 12 feet in places, according to the National Weather Service.
By comparison, Hurricane Ian, a powerful Category 5 storm that raked Florida’s southwest coast in 2022, brought an estimated $56 billion in insured losses.
“Wind shear increased as Isaias accelerated towards the Florida Panhandle, inducing weakening and causing Isaias to become more asymmetric,” KCC said in its Oct. 15 report. “The strongest winds were displaced to the north and northwest of the eye and the eyewall began to break down.”
Still, damage to many homes and businesses was seen in pockets across the Panhandle and in Alabama and coastal Mississippi. Insurance carriers have said thousands of claims have been received, so far.
Vexcel, an aerial imaging firm, said its images show about 17,860 structures were damaged by the storm in Florida, Alabama and Mississippi. About 3,141 of those sustained major damage and 631 were destroyed. Before and after photos and video can be seen here.
Inside the city of Pensacola, the storm caused at least $70 million in damage to private property, the city’s mayor told the Pensacola News Journal. It was not clear how much of that property was insured. Escambia County officials said damage to county-owned buildings and facilities had reached $64 million.
The cities of Milton and Navarre, east of Pensacola, also suffered heavy damage in spots. Downed trees and severe structural damage to buildings were reported in Milton, KCC noted. Partial and total pull-out of roofs were observed in residential and commercial properties, including single family homes, multi-family homes, motels, and grocery stores. An apartment complex in the city saw most of its roof structure ripped off, and the nearby high school gymnasium lost most of its roof, according to witnesses and news reports.
Florida’s Citizens Property Insurance Corp., the state-created carrier that is once again moving toward becoming the insurer of last resort, is expected to absorb the losses. Citizens held about 8,800 policies in the 10-county Panhandle area when Isaias made landfall, OIR data show.
That’s far less exposure than Citizens had just three years ago, as policyholders have moved to primary market insurers after legislative reforms took hold, AM Best explained. “The successful depopulation of Citizens, coupled with a relatively mild hurricane season so far, will keep Citizens intact as Florida’s insurer of last resort,” the rating firm noted.
Citizens, which until last year was the largest property insurer in the state, has seen its market share drop significantly. State Farm Group, Progressive Insurance Group, and Berkshire Hathaway Insurance Group now hold the top three spots in the Florida property insurance market, all with market share of at least 6.7%, AM Best reported.
“The Florida property-casualty industry is well-capitalized to handle a high volume of insured storm losses and efficiently process claims to help their customers recover as quickly as possible,” Mark Friedlander, senior director of media relations for the Insurance Information Institute, said in an email.
Top photo: The apartment complex in Milton, Florida, after the storm. (AP Photo/Gerald Herbert)