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Hurricane Ian expected to drive more property insurers out of business

Homes that sustained wind damage caused by Hurricane Ian are seen in this aerial view, Thursday, Sept. 29, 2022, in Fort Myers, Fla. (AP Photo/Marta Lavandier)
Homes that sustained wind damage caused by Hurricane Ian are seen in this aerial view, Thursday, Sept. 29, 2022, in Fort Myers, Fla. (AP Photo/Marta Lavandier)

Six property insurance companies have gone under in Florida this year, and more are on the verge of failing in the aftermath of Hurricane Ian.

"Is it possible more Florida companies will fail because of Hurricane Ian? Yes," said Mark Friedlander, a spokesperson with the Insurance Information Institute, a nonpartisan research organization. "The reason why is litigation, not the actual claims that are being paid out.”

Ian dealt a major blow to Florida’s already crippled property insurance market. The Category 4 storm is expected to go down as one of the costliest in U.S. history, and that’s expected to drive more of the state’s private insurers out of business.

Ian will likely become the second costliest hurricane on record to hit the U-S — with costs to insurance companies exceeding $60 billion, Friedlander said.

“Here's the breakdown of that $60 billion loss: We anticipate $10-to-20 billion, roughly a third of the entire loss, will be related to litigation expenses," Friedlander said. And that's problem because more than a couple dozen insurance companies in the state are on the verge of closing.

A record 116,000 property claim-related lawsuits were filed in Florida last year. Friedlander says that number was projected to reach 130,000 this year, but that was before Ian. “Now on top of that, you're going to have perhaps thousands of Hurricane Ian-related claim lawsuits.”

Florida lawmakers will work on stabilizing the state’s property insurance market when they meet in mid-December.

“Until statutes are changed and stricter regulations are put in place, we will continue to see a high level of litigation and claim fraud in the state.”

The insurance industry is asking for an end to "one-way attorney's fees," which companies are required to pay if they lose a claims dispute, Friedlander said.

Lawmakers could do that when they meet in a special legislative session Dec. 12 - 16.

But any policy changes aren’t expected to drive down rates for at least couple of years. "There are so many lawsuits already in the pipeline," Friedlander said. "Sometimes lawsuits could take several years to play out in the court system. So nothing is going to change immediately. In fact, we anticipate rates for for homeowners will continue to increase into the coming year."
Copyright 2022 WFSU.

Valerie Crowder is a freelance reporter based in Panama City, Florida. Before moving to Florida, she covered politics and education for Public Radio East in New Bern, North Carolina. While at PRE, she was also a fill-in host during All Things Considered. She got her start in public radio at WAER-FM in Syracuse, New York, where she was a part-time reporter, assistant producer and host. She has a B.A. in newspaper online journalism and political science from Syracuse University. When she’s not reporting the news, she enjoys reading classic fiction and thrillers, hiking with members of the Florida Trail Association and doing yoga.