Hurricane Milton Could Be ‘Devastating’ for Florida Insurers, Warns Credit Rating Agency

This drone picture shows people lining up in their cars for fuel at a gas station ahead of Hurricane Milton's landfall in Bradenton, Fla., on Oct. 9, 2024. Miguel J. Rodriguez Carrillo/AFP via Getty Images

Damages from Hurricane Milton may put Florida property insurers and reinsurers under significant financial pressure after Hurricane Helene, according to global credit rating agency AM Best.

Milton made landfall near Siesta Key in Florida on Wednesday, classified as a Category 3 storm. It came days after Helene hit the region.

The back-to-back natural disasters could turn out to be “devastating” for insurers, AM Best said in an Oct. 9 report.

“Insured losses from Hurricane Milton are expected to be significant and amplified by damage caused by Hurricane Helene,” it said.

“Debris from Hurricane Helene that has not been secured or disposed up of could become airborne once Hurricane Milton makes landfall, exacerbating potential property losses,” Christopher Graham, senior industry analyst at AM Best, said in a statement.

While larger insurers may be in a position to absorb losses caused by Milton, insurers concentrated in Florida may face a tougher time, according to the agency.

After hurricanes Irma, Michael, and Ian hit Florida between 2017 and 2022, Florida-focused insurers suffered greater losses than diversified firms, it noted.

A large number of insurance companies went insolvent in Florida in the aftermath. Helene and Milton are expected to have a “compounding” effect on insurers in Florida.

“The heavy losses will trigger many property catastrophe reinsurance treaties in advance of reinsurance renewals being priced for 2025,” Chris Draghi, associate director at AM Best, said in a statement.

“The upcoming January 1 renewals for property reinsurance programs could be more problematic for primary insurers because of the effects of these recent hurricanes.”

Local insolvencies, a tightening reinsurance market, and a decline in capital among Florida insurers will “significantly pressure” the property insurance market, AM Best predicted.

Hurricane Milton triggered at least 133 tornado warnings in Florida on Wednesday, including 49 in Tampa.

Early Friday, the National Hurricane Center said the hurricane had passed out to sea. It was forecast to move away from Florida and pass over to the north of the Bahamas later in the day.

Hurricane Damages

Before Hurricane Milton made landfall near Siesta Key, there were concerns about whether it would move toward Miami.

Ratings firm Morningstar DBRS suggested that such an event could result in an initial insured loss of $60 billion to $100 billion, according to an Oct. 9 statement. Hurricane Katrina was the costliest natural catastrophe in the United States, it said, resulting in insured losses of $100 billion in today’s dollars.

While Miami was affected by Milton, the full scale of destruction and potential losses are unclear. During a briefing on Thursday, Florida Gov. Ron DeSantis said that the worst-case scenario “did not happen.”

Videos circulating on social media show the damage to properties in Tampa.

In an Oct. 10 X post, Jenna Laine, a journalist at ESPN, posted a video showing damage to her garage.

“Was hesitant to post this but I want people to understand the seriousness of hurricanes and the damage they can do. This is in Tampa, 67 miles north of where Hurricane Milton made landfall. Our six-story parking garage wall collapsed. Thank God nobody was hurt,” she wrote.

In a May report, information services firm CoreLogic said that more than 32.7 million residential properties with a total reconstruction cost of $10.8 trillion were at “moderate or greater risk of hurricane wind damage” in the U.S. Gulf Coast and East Coast this year.

In addition, roughly 7.7 million properties with a reconstruction value of $2.3 trillion face a risk of storm surge flooding, it said.

“Underestimating the impact of natural catastrophes can lead to a dangerous financial imbalance where insurance payouts surpass collected premiums,” the company stated. “This discrepancy can create an unstable situation for insurers and other stakeholders.”

CoreLogic estimates Hurricane Helene to have resulted in losses of between $30.5 billion and $47.5 billion. Insured wind and flood damages were calculated to be between $10.5 billion and $17.5 billion, leaving uninsured flood losses of $20 billion to $30 billion.

“When intense storm surge and flooding events, like Hurricane Helene, reach regions that are infrequently affected by natural hazards, we can expect to see damage to homes without flood insurance coverage,” Jon Schneyer, director of Catastrophe Response at CoreLogic, said in a statement.

“The fact that so much damage was concentrated outside the Special Flood Hazard Areas (SFHAs) makes it challenging to realize the full extent of impact to uninsured homeowners.”