Make us your home page
Instagram

Florida insurance rates could rise as Hurricane Irene adds to yearlong disaster tally

Florida was spared Hurricane Irene's wrath, but that doesn't mean homeowners here won't have a price to pay down the road.

The cost of all that flooding could be the first factor to affect our pocketbooks. The National Flood Insurance Program, run through the Federal Emergency Management Agency, was essentially bankrupted after Hurricane Katrina in 2005. So taxpayers across the country could be on the hook to bail out hundreds of millions of dollars, perhaps more than $1 billion, in insured flood losses from Irene.

The other pocketbook issue: reinsurance, the added layer of coverage that insurers buy to protect themselves against catastrophic loss. Typically, when the price of reinsurance goes up, insurers pass that cost on to their policyholders.

Hurricane Irene caused between $3 billion and $5 billion in insured (nonflood) losses, according to early estimates from the Insurance Information Institute. That's not enough to move the reinsurance market by itself. But put together with other catastrophes this year, particularly tornadoes from Alabama to Missouri, and it means reinsurers have spent far more than anticipated.

Bob Hartwig, an economist and president of Insurance Information Institute, said his "back of the envelope" calculation is that total insured losses in the United States so far this year are in the $22 billion range. That would make 2011 the seventh most expensive year ever after adjusting for inflation.

"That does put some pressure on the price of reinsurance," Hartwig said. "Rates would move up a bit, especially in more catastrophe-prone areas." Areas, for example, like Florida.

Ratings agency A.M. Best also said Irene adds to a year of above-normal frequency of thunderstorms and tornadoes, which could lead to higher reinsurance costs. But given we're in the heart of hurricane season, the agency said, what happens with the next round of insurance rates is yet to be determined.

Regardless, the impact won't be felt immediately.

Property insurers are already operating under reinsurance rates set for the season. New contracts, for the most part, won't become effective until next January, Hartwig said.

Bob Warren, client services manager with property insurance ratings agency Demotech, said it's too early to calculate insured damages from Irene. Ultimately, though, he thinks the biggest cost may be tied to flooding along the coast and throughout New England.

Catastrophe modeling firm Eqecat Inc. said rainfall may be "the most damaging component" associated with the storm, while risk management firm Kinetic Analysis has said flood damage alone could total $1 billion.

What's unknown is how much damage will be covered under the federal flood insurance program and how much money Congress will need to bail it out.

"Eventually, the federal government is going to make sure that the fund is covered for future needs, not just (paying Irene claims)," Warren said. "That's a taxpayer issue."

Jeff Harrington can be reached at harrington@sptimes.com or (727) 893-8242.

State insurance boss offers help

Insurance adjusters and utility workers from Florida are helping out Hurricane Irene victims to the north. Now, Florida Insurance Commissioner Kevin McCarty, above, wants to do his part for storm relief. McCarty has offered volunteers and use of the catastrophe reporting software developed by his office to help speed up damage estimates and response time. The software was used to help nearby states during the hurricanes of 2004 and 2005. "While our state was fortunate, other states must begin the painful process of cleanup and damage assessment from the storm," McCarty said. "Our state's insurance community stands ready to offer any assistance required."

Florida insurance rates could rise as Hurricane Irene adds to yearlong disaster tally 08/29/11 [Last modified: Monday, August 29, 2011 10:42pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Tampa is 15th-most popular city to move to with U-Haul

    Markets

    TAMPA —Tampa is undoubtedly a destination point, at least according to U-Haul.

    Tampa is the No. 15 destination for people moving with U-Haul trucks. | Times file photo
  2. Florida's economy growing faster than other big states and far better than U.S. overall

    Business

    When it comes to economic growth, Florida's running alongside the leading states and well ahead of the United States as a whole.

  3. Westshore Marina District project takes shape with another acquisition

    Real Estate

    TAMPA — One of Tampa Bay's prime waterfront areas took another major step toward redevelopment Friday as WCI Communities bought 2.35 acres in Westshore Marina District.

    WCI Communities, Lennar's high-end subsidiary,has paid $2.5 million for 2.35 acres in the Westshore Marina District for 35 townhomes. WCI is under contract  to buy an additional 9.5 acres.
[BTI Partners]
  4. Posh Guy Harvey RV park to open in Tampa Bay with $250,000 cottages

    Business

    HOLIDAY — Love those Guy Harvey T-shirts with the soaring marlins? In the not too distant future, you might be able to kick back in your own Guy Harvey cottage in the first-ever Guy Harvey RV park.

    Renderings of the clubhouse and an RV cottage site of the planned Guy Harvey Outpost Club & Resort Tarpon Springs.
[Guy Harvey Outpost Collection]
  5. Port Tampa Bay secures $9 million grant to deepen Big Bend Channel

    Business

    Port Tampa Bay has secured a $9 million grant from the U.S. Army Corps of Engineers for the widening and deepening of the Big Bend Channel in southern Hillsborough County.