Staff Reports
Insured losses from Hurricane Hermine could amount to $500 million, but the industry could absorb the hit, according to an analysis published this week.
Fitch Ratings Inc. cited an estimate from Karen Clark & Co., a “catastrophe modeling” consultancy in Boston.
Total economic damages could amount to $1 billion in Florida and other southeastern states, Fitch said.
Insurers could absorb the losses, although they might depress third-quarter earnings.
The biggest homeowner insurance carriers in Florida are Universal Insurance Holding Group, Tower Hill, State Farm Mutual, Citizens Property Insurance and Federated National Insurance, Fitch said.
Hermine, a Category 1 storm, was the first hurricane to land in Florida since Wilma in 2005. Since then, Fitch said, the risk has shifted away from Citizens — Florida’s state-run insurer of last resort — and national insurers to smaller, specialist Florida insurers.
These now control 60 percent of market share.
The largest reinsurer for these policies is the Florida Hurricane Cat Fund — also state-run. That fund has built its capital reserves and ability to pay claims since Wilma.
Still, “the limited history for most new primary companies means that their balance sheets and operating infrastructures are untested by any large loss experience,” Fitch said.
“Also, the ability for these companies to quickly and effectively assess and pay losses during a substantial increase in claims from a large hurricane landfall is uncertain. Loss experience from Hermine will provide insight into the preparedness of the Florida specialist companies for the next significant storm that hits the state.”
