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With Florida Overdue for a Hit, Hurricane Season Begins on a Tide of Pessimism

| May 28, 2015

florida hurricane insurance

Florida has been sleeping easy through nine hurricane seasons. Insurance officials say it can;t last. (NASA)

Florida is due for a hurricane. Overdue, in fact.

The last storm to hit Florida, Hurricane Wilma, came ashore Oct. 24, 2005, and Floridians with homeowners’ insurance policies are still paying. At least for one more month.

Florida officials believe they are as ready as possible, in terms of storm preparation and the financial strength of the insurance industry, for the next hurricane that crashes into any part of the Sunshine State’s shoreline.

Forecast tracking has improved, and even the use of social media — the state directs people to its “Get a Plan!” website— has given the state another means to communicate with the public pre- and post-storm.

But with the 2015 hurricane season starting Monday, officials say the question remains how well-prepared individual Floridians will be when a storm packing sustained winds of 74 mph or greater finds Florida.

“I think we’re ready. We do a lot of work March through May to get ready for June 1,” said Florida Division of Emergency Management Director Bryan Koon after joining President Barack Obama in a pre-storm season briefing Thursday at the National Hurricane Center in Miami.

The state agency recently ran a pair of drills, testing officials and public and private agencies to assess how they would respond if different parts of the state were hit by storms. In the most-recent scenario, officials portrayed the Panhandle getting hit by a hurricane and a week later a second storm crossing South Florida, following the path of the killer 1928 hurricane that crossed Lake Okeechobee.

“Those emergency managers, I think they are (ready),” Koon said. “And businesses and non-governmental charitable organizations, I’m confident in all of them. Now it’s a matter of making sure that people understand Florida is a great place to live, but they have to take the appropriate precautions so they can take care of themselves so we can take care of those less fortunate.”

How well Floridians heed Koon won’t be known until a storm makes landfall.

Nine hurricane seasons have come and gone for Florida since Wilma.

There have been some tropical storms and heavy rain events.

But otherwise, Florida’s population has grown the past decade by more than 2 million, with a sizable chunk of the increase coming in coastal areas.

On Wednesday, the National Oceanic and Atmospheric Administration predicted a below-normal Atlantic hurricane season, with between six to 11 tropical storms and three to six growing into hurricanes. The Weather Channel’s Professional Division has forecast nine named storms, with five reaching hurricane strength.

NOAA Administrator Kathryn Sullivan, in a release from the White House on Thursday, referred to the 1992 hurricane season that was punctuated by the monstrous Hurricane Andrew, which swept across South Florida.

“A below-normal season doesn’t mean we’re off the hook,” Sullivan said in the release. “As we’ve seen before, below-normal seasons can still produce catastrophic impacts to communities.”

Sam Miller, executive vice president of the Florida Insurance Council, said he has a “bad feeling” about this year.

“We’ve had some luck,” Miller said. “We had luck with (Hurricane) Katrina, which brushed the Keys. But people who look at this say this just can’t continue.”

Still, Miller is in the camp viewing Florida, which skirted through the recession with relatively little money behind the state’s Hurricane Catastrophe Fund, as being financially prepared to respond to a massive storm.

The “Cat Fund,” created after Hurricane Andrew to provide backup coverage to property insurers if major storms hit the state, has about $17 billion available.

Miller said he is less concerned about insurance companies that have been created since Wilma, but does have some worry about the sharpness of adjusters and others who for years haven’t had to respond to a disaster.

“I think there is a concern maybe about rust in the system,” Miller said. “Hopefully we’re ready to handle whatever we face. There is a nightmare hurricane out there that will hit Miami, and we’ll do the best we can.”

Also count Jay Neal, director of the advocacy group Florida Association for Insurance Reform, among those expressing more concern about the response of Floridians than the private insurance industry.

“This is one area where the regulatory structure and ratings agency have done an excellent job,” Neal said.

Neal noted that every Florida company rated by Ohio-based Demotech, Inc., which provides financial-strength ratings for insurance companies, has a reinsurance program in place to handle a 1-in-100-year storm, a second storm deemed a 1-in-50-year event, coverage for a third storm and the ability to buy additional coverage for a fourth storm.

“These standards have been significantly increased since 2010 and cover a series of catastrophic events so devastating that they have never before occurred in recorded history,” Neal said.

A 1-in-100-year storm is an event that has 1 percent chance of occurring in any given year. A 1-in-50-year storm has a 2 percent change of happening.

As the six-month hurricane season starts, the state-backed Citizens Property Insurance Corp. has a $7.5 billion surplus, the highest in its history, and $3.9 billion in reinsurance coverage, which is insurance for insurers.

“We expect to be in the financial position to handle a 1-in-100 year storm without having to levy any assessments on Florida policies,” said Citizens spokesman Michael Peltier. “That’s a pretty big change from the $11.6 billion in assessments Florida policyholders faced just four years ago.”

The last assessment imposed, a 1 percent surcharge on most homeowners’ policies that ends July 1, was enacted to recoup $887 million of the roughly $1.7 billion deficit created by Hurricane Wilma.

The lack of storms has been a key factor in the improved financial status of Citizens, along with a massive depopulation effort that since 2012 has driven nearly 1 million policies into the private market. As of April 30 Citizens had 591,883 policies.

–Jim Turner, News Service of Florida

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3 Responses for “With Florida Overdue for a Hit, Hurricane Season Begins on a Tide of Pessimism”

  1. eeore says:

    Were Doomed……were all Doomed !!!!


    I worked in the insurance industry and could never quite figure out how to explain to people that after taking their premiums for year after year, when something happened that required multiple claims, we assessed them an additional surcharge to recover the money.

  3. Footballen says:

    Absolutely amazing!!!!!!!

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