Florida’s property insurance market is in crisis following the devastating landfall of Hurricane Milton, which struck the state just weeks after Hurricane Helene. With Milton now ranked among the most powerful storms of the season, AM Best warns that its impact could lead to significant financial strain, particularly for insurers focused exclusively on Florida.
Florida-only insurers are especially vulnerable due to their lack of diversification. These companies were already grappling with losses from Hurricane Helene – and the damage caused by Milton may push some to the brink of insolvency.
In contrast, national insurers with diversified portfolios across multiple states are better equipped to handle the financial impact, though AM Best indicates that the overall market outlook remains challenging.
Much of the destruction from Hurricane Milton mirrors the flooding caused by Hurricane Helene. Since many standard insurance policies exclude flood coverage, a significant portion of the losses will go uninsured, further burdening the already debt-laden National Flood Insurance Program (NFIP).
Reinsurance concerns are also rising. AM Best reports that the combined damage from Helene and Milton is expected to harden reinsurance rates for the 2025 renewals. In particular, Florida-based insurers may struggle to secure adequate reinsurance coverage, which could lead to higher premiums for homeowners and potentially reduced availability of property insurance in the state.
Additionally, AM Best points out that the catastrophe bond market, which had been performing well earlier in the year, is now under pressure. If losses from Milton trigger bond payouts, it could dampen investor appetite and affect future catastrophe bond issuances, further complicating the insurance landscape.
With both Hurricane Milton and Hurricane Helene leaving behind a path of destruction, the outlook for Florida’s property insurance market is grim. Insurers are now facing difficult decisions as they assess their financial positions – some may not even survive the compounded effects of these two storms.
“We expect reinsurers will participate in the loss to a much greater extent than they have with other recent events. This could ultimately improve relationships with their cedents, sustaining the hard property market conditions for a few more years,” AM Best said.
