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Ian’s damage hits Florida’s already fragile insurance market

Hurricane Ian (now downgraded to a tropical storm) left a path of destruction in Florida that Governor Ron DeSantis called “historic.” The human toll remains unclear as rescuers struggle to reach residents trapped by catastrophic flooding. But the physical damage is growing: at least two bridges were destroyed, winds ripped roofs off buildings, a 10ft storm surge sent cars and boats crashing into homes and heavy rain submerged entire cities. It is expected to be one of the costliest storms in US history. And it will certainly be a strain on the state’s already fragile insurance sector.

When natural disasters destroy communities, people usually turn to insurance companies.

Mark Friedlander of the Insurance Information Institute said the disaster could result in more than $30 billion in property losses.

“Businesses are collapsing…virtually every business in Florida that sells homeowners insurance is losing money,” Friedlander said.

A dozen state insurers have closed since 2020, and dozens more are in financial trouble, according to state regulators. This has driven up prices for Florida homeowners, who pay the highest rates in the country.

“We’re getting to a point where homeowners in Florida can no longer afford insurance,” Friedlander said. And some owners can’t buy private insurance at all.

Many large insurance companies have left the state, said Martin Grace, a Temple University business professor who has a home in Florida.

He said as private insurance has become more expensive and less available, more consumers have turned to Florida’s state-run insurer called Citizens.

“It’s the largest homeowners insurer in the state,” Grace said. “And that means taxpayers are responsible.”

Florida has unique regulatory issues, but other states facing increasing risks of climate disasters, such as Louisiana and California, have also seen private insurance markets falter, said Carolyn Kousky of the Environmental Defense Fund.

“We are seeing a shift in disaster risk from the private sector to the public sector,” she said.

Kousky said the only way to manage this long-term liability is to reduce the underlying risk by changing how and where we build.

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