Lawsuits Pose a Risk of Increasing Ian’s Cost

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According to Mark Friedlander, corporate relations director of Triple-I, litigation expenses might increase insured losses from Hurricane Ian by $10 billion to $20 billion, further hurting Florida’s already troubled homeowners’ insurance market.

 

Ian’s insured losses, according to early estimates, exceeded $50 billion.

 

In an interview with Insurance Business America, Friedlander stated, “Based on the history of lawsuits after Florida hurricanes and the state’s highly litigious atmosphere, we predict a substantial volume of claims to be brought in the wake of Hurricane Ian.”

 

The contrast between windstorm and flood losses will likely be present in the majority of lawsuits.

Flood-related damage is typically not covered by homeowners’ policies, although it can be difficult to tell the difference between wind and flood damage after a large hurricane.

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The National Flood Insurance Program run by FEMA as well as an increasing number of private carriers offer flood insurance.

 

According to Friedlander, trial lawyers are “on the ground” and actively seeking clients in some of the hardest-hit regions.

This will be a crucial factor in determining the viability of struggling regional insurers who are already dealing with difficulties financially.

 

This year has already seen the failure of six Florida-based insurers.

According to data provided by the Florida governor’s office, Florida represents only 9% of insurance claims yet is responsible for 79% of all homeowners’ claims litigation in the United States.

In recent years, house insurance premiums have increased by double digits as a result of litigation; Florida’s average yearly premium of $4,231 is among the highest in the country.

Due to years of excessive litigation and fraudulent roof replacement schemes, Florida has seen a rise in the price and scarcity of homeowners’ insurance, according to Triple-I CEO Sean Kevelighan.

The cumulative net underwriting losses Florida homeowners’ insurers suffered between 2017 and 2021 were largely caused by these two factors.

The number of homes protected by flood policies has decreased from five years ago, according to Trevor Burgess, CEO of Neptune Flood Insurance, a private flood insurer based in St. Petersburg, Florida.

While more than 50% of homes in Florida’s western Gulf Coast have flood insurance, Friedlander told Fox Weather that “inland…the take-up rates for flood insurance are below five percent.”

 

Although Florida is consistently and severely at risk from hurricane-related floods, Florida is not the only state that suffers from this protection gap.

Hurricane-related inland flooding is increasing losses and damage worldwide, frequently in places where homeowners don’t typically get flood insurance.

 

Massive amounts of rain fell in the days following Hurricane Ida’s landfall in August 2021, flooding streets and subway lines in New York and New Jersey.

As water suddenly inundated basement apartments in those states and Pennsylvania, more than 40 people perished.

Take-up rates for flood insurance were less than 5% in the areas that were most severely affected.

 

The deadly floods that ravaged Eastern Kentucky in late July 2022 and claimed 38 lives also went mostly insurance for.

In the counties hardest hit by flooding, only 1% of properties have federal flood insurance.

 

Keith Wolfe, president of Swiss Re’s U.S. property and casualty division, stated in a recent Triple-I Executive Exchange that “we’ve seen some very big shifts in the impact of flooding from hurricanes, quite far inland.”

In the last five years, hurricanes have just behaved significantly differently once they reach land than they have in the previous 20.

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