Hurricane Ian insured losses jump ‘significantly’ at Florida’s Citizens

Florida’s state-backed insurer Citizens has reported a “significant increase” in its Hurricane Ian loss estimates after accounting for additional costs expected from litigation and other claims-related expenses.

Citizens Property Insurance Corporation now estimates that direct losses and loss adjustment expenses will total $3.8 billion from the Category 4 storm that slammed into Southwest Florida on September 28, 2022.

The new estimates are way over the preliminary range of $2.3 billion to $2.6 billion, which Citizens claims was “based strictly on the results of a single hurricane model”.

The revised projection of $3.8 billion incorporates the results of a second hurricane model, considering the actual claims activity to date, and includes additional provisions for litigation costs and inflation.

Of the $3.8 billion direct losses and loss adjustment expenses, the revised projection anticipates that $1.4 billion will be ceded to the Florida Hurricane Catastrophe Fund (FHCF) and private reinsurance.

The catastrophe bonds Citizens has in place “are not expected to be triggered,” the company claims. After the consideration of this reinsurance, the net impact to Citizens’ surplus is expected to be $2.4 billion.

Citizens, however, noted that these early projections are subject to change and “may take several years to fully mature”. It will be re-evaluated at year-end once the insurer has a full three months of actual claim activity to analyse.

Hurricane Nicole, which made landfall on Florida’s east coast on November 10, 2022, is in the early stages of evaluation, but is not expected to have a major financial impact to Citizens, the company claims.

“We will continue to update the market and other stakeholders as we gather additional information from actual losses,” said Jennifer Montero, Citizens’ chief financial officer.

Citizens had 1.121 million policies on its books as of November 11, 2022. The company has seen its policy count grow by approximately 363,000 since January 1, 2022, a 47.7% increase, as Florida’s private property insurance market continues to face challenges.

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