Hurricane Milton has caused significant damage, with early estimates projecting losses to reach as high as $34 billion. This estimate includes both flood and wind damage, with uninsured flood damage alone estimated to be between $4 billion to $6 billion. Even with this high level of destruction, the damage could have been worse, as the estimate does not take into account any damage from the nine tornadoes that accompanied the storm, which is believed to have caused at least 24 deaths in Florida.
Most homeowner policies do not cover flood damage, with only damage caused by high winds typically being covered. The National Flood Insurance Program (NFIP) provides coverage for insured flood damage, but many homeowners outside high-risk flood areas do not have this coverage. Wind damage was the primary cause of losses from Hurricane Milton due to the unusual nature of the storm. Strong winds on the northern and northwestern sides of the hurricane, usually weaker, caused significant damage, contributing to the high overall losses.
Despite the strength of the winds, the wind damage caused by Hurricane Milton was less than expected, and there was minimal storm surge flood damage, particularly in the Tampa Bay area. CoreLogic’s analysis, conducted after examining the storm damage firsthand, found that wind damage was primarily responsible for the losses. The concentration of property in the Tampa Bay area posed a risk for larger insured losses, but luckily the damage was not as extensive as anticipated.
The losses from Hurricane Milton are expected to be lower than those from Hurricane Helene, which struck just two weeks prior. Despite this, Milton could still rank among the 10 costliest hurricanes in terms of insured losses in the United States, including those covered by the NFIP. The upper end of the insured loss estimate for Hurricane Milton would be enough to make it the 10th biggest hit to insurers, residents, and businesses from a storm, surpassing Hurricane Ike from 2008.
The insurance market in Florida is facing challenges due to the successive impacts of Hurricanes Helene and Milton. National insurance companies are leaving the market, and many local private insurers are experiencing financial difficulties. Homeowners’ insurance premiums in Florida were already high compared to other states, with Citizens Property Insurance Corp., the state-backed insurer of last resort, holding 1.3 million homeowners policies. The company is facing insolvency, and if claims exceed its reserves, it has the authority to impose a premium surcharge on policyholders across the state to cover all claims.
Overall, the aftermath of Hurricane Milton presents significant challenges for Florida residents, insurers, and the insurance market as a whole. The high level of damage, combined with the troubled insurance market in the state, creates uncertainty for homeowners and businesses. Recovery efforts will be challenging, and it remains to be seen how the insurance industry will respond to significant losses from back-to-back hurricanes.
