Back-To-Back Hurricanes Batter Florida’s Insurance Market: Stocks To Watch – Allstate (NYSE:ALL), Progressive (NYSE:PGR)

Insurance companies operating in Florida face significant challenges following two intense hurricanes: Helene and Milton.

What Happened: After Hurricane Helene, losses for private insurers were estimated at $3 to $6 billion. Hurricane Milton, expected to make landfall Wednesday on Florida’s Gulf Coast near Tampa, is adding further strain to Florida’s insurance market.

High claim volumes, rising premiums and an exodus of insurers already slammed customers. With Hurricane Milton looming, the market could experience further destabilization.

The average annual premium for homeowners’ insurance in Florida has surged to $10,996, making it the highest in the nation.

Insurify projects that this number will rise by an additional 7% in 2024, bringing the average to $11,759. This figure is nearly four times the national average, driven by multiple factors including the increased frequency and severity of hurricanes, rising costs of building materials, and issues with reinsurance.

Florida has also seen a significant number of insurance companies pull out of the state, further exacerbating the situation​.

See Also: Hurricane Helene Exposes Vulnerability Of Florida’s Home Insurance Market

Stocks To Watch: The ongoing hurricane activity in Florida is expected to impact several major publicly traded insurance companies.

Key insurers facing challenges include:

• Allstate Corp ALL
• Travelers Companies Inc TRV
• Progressive Corp PGR
• State Farm STFGX

Citizens Property Insurance Corp. covers more than 1.4 million policies but with much higher premiums, averaging $21,707 annually​. Dubbed Florida’s insurer of last resort, the company is transferring more than 648,000 policies to private insurers, per Click Orlando.

These companies are experiencing heavy financial strain due to increased claims, which will likely lead to higher premiums and reduced coverage availability. Smaller, regional insurers operating in Florida may also face insolvency or further pressure to exit the market.

Why It Matters: According to Insurance Business Magazine, citing Weiss Ratings data, several large Florida insurers denied nearly half of homeowner claims closed in 2023.

Among these carriers were:

• Castle Key Indemnity Co., denied 47.1% of claims
• Castle Key Insurance Company, at 46%.
• State Farm Florida Insurance Company, denied 46.4%

Coverage is often denied to conserve cash and avoid bankruptcy.

How We Got Here: While it’s difficult to attribute any single hurricane directly to climate change, many scientists say that climate change exacerbates the frequency of extreme weather events.

Warmer ocean temperatures, fueled by global warming, provide more energy for storms, making hurricanes such as Helene and Milton more intense.

Rising sea levels also contribute to more severe storm surges. Additionally, changing weather patterns may cause slower-moving storms, leading to more rainfall and prolonged damage in affected areas. Overall, climate change plays a role in the increasing severity of storms.

Florida Gov. Ron DeSantis declared a state of emergency for 51 Florida counties. So far, he has generally avoided directly linking the increasing intensity of hurricanes in Florida to climate change.

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Photo: Massive destruction on Fort Myers Beach after Hurricane Ian, 2022, by Felix Mizioznikov via Shutterstock