Hurricane Idalia is making its way to Florida with an expected landfall tomorrow morning. And with hurricanes, comes property damage and insurance claims.
The state’s property insurance market took a huge hit last hurricane season.
Mark Friedlander, with The Insurance Information Institute, said there are new changes that homeowners should pay attention to.
Listen to the full conversation in the player above.
Talia Blake: Over the past year, there have been a lot of changes to Florida's insurance market. What should homeowners know ahead of Idalia making landfall in the state?
Mark Friedlander: While there's been a lot of volatility in Florida's property insurance market for several years, the insurance industry is in a good capital position to pay claims from the incoming storm.
Talia Blake: So some of the issues that we saw that arose during Hurricane Ian and Nicole we might not see a lot of those issues, with this storm or any storms following Idalia, is what you're saying?
Mark Friedlander: Yeah, the biggest issue we saw with Hurricane Ian last year was there was one major insurer in Florida that did not have adequate levels of reinsurance protection. That's UPC Insurance. And as we saw a few months later, UPC was declared insolvent leaving more than 20,000 of its policyholders with unpaid claims from Ian, that are now being handled by the Florida Insurance Guaranty Association. This year, the big difference is all Florida residential insurers have had their ratings reaffirmed through various rating agencies, and they all have adequate levels of reinsurance coverage, so that they have backstops in place in case they have to pay a high volume of property loss claims from the storm.
Talia Blake: Speaking of the storm and speaking of if they have a loss, how will the recent changes to Florida's insurance market impact residents if they need to file a claim after Idalia?
Mark Friedlander: The biggest change that will impact consumers is now you will have just one year to file a loss claim from a hurricane. In the past, it was three years, then was changed to two years. And now with the latest legislation, it's down to one year. So you have 365 days from the date of loss to file a claim. That's really important and, of course, we always recommend starting the claim process after a significant property loss as quickly as possible to make sure you get all the documentation in place, begin the process of having an insurance adjuster, look at your damage, and try to get back on your feet as quickly as possible.
Talia Blake: Speaking of making that claim the first thing that you do after major loss, is there anything that people should be doing today to make sure that they're prepared, that their things are in order, or any certain documents that they should be looking for?
Mark Friedlander: Two points. One is make sure you have copies of your insurance policies and also the contact information for your insurance company or your agent. So that if you get for example, displaced from your home because of the storm, you could quickly access this information, you have all the documentation, you need to start a claim filing process. That's important. And then it's also important, take a look at your policy. So you clearly understand what's covered because various insurance policies come into play for hurricane damage. There's a property insurance policy that covers your windstorm losses. There's a flood insurance policy, if you have that, hopefully you do, that covers flood damage. And then there's your auto insurance policy, comprehensive auto, which about four out of five drivers carry today covers all storm related losses. So you want to make sure you understand what each of your policies covers. The other important point is, make sure you have a home inventory. That's not only a list of all your possessions, but photos of your possessions as well. Take photos of all of the rooms in your home, the condition of your home — meaning the exterior and try to get the roof into the photo — so that you could prove what the condition was of your home before the storm struck versus after the storm if you suffer damage.
Talia Blake: That's a really good tip. I've never heard about the taking pictures of your things before a storm. That's a good tip. So I know you said earlier that Florida's property insurance market is in a much better place than last hurricane season. But there are still some issues being fixed. So how could this storm impact the insurance market here?
Mark Friedlander: Florida's insurance market is in a good position to pay claims. That's the most important takeaway today. But, the overall markets still seeing a lot of volatility. It's still very challenging for consumers to find coverage and find affordable coverage. Many companies have stopped writing new business in the state, which makes the markets even tighter. That's kind of the bad news side. But good news is the Florida regulator has approved four new companies to start writing residential policies in Florida. So there are companies coming to Florida that want to write business here. So that will give more choices for consumers. So kind of a mix of good news and bad news. But once again, the biggest takeaway is the financial position of the market is solid for hurricane season because of the adequate levels of reinsurance that companies have been able to purchase on the global market.
Talia Blake: And just a quick follow up, I know you said that four new companies just recently got approved to start writing policies here. When do you anticipate us kind of seeing a significant drop in policies when it comes to citizens insurance, the state backed insurer?
Mark Friedlander: Well, we're seeing some positive signs regarding Citizens. Nearly 300,000 policies have been approved for what's called depopulation, that means that policyholders will get takeout offers from private insurers. There's more than a half dozen insurers participating in the program. You will get a takeout offer. And the way it works is, according to state regulation, if you get a takeout offer within 20% of the cost of your Citizens premium, you must accept that offer. If you're get a take out offer above 20% threshold for what you're paying Citizens today, you could decline the offer. So it's a random process, they select 300,000 policies out of Citizens roughly 1.37 billion today, and they are randomly picked by the company's meaning, in other words, companies don't cherry pick these, they are assigned a pool of policies depending on how many policies they've agreed to take on, and then they will review those policy and decide if they fit their underwriting criteria. If they do, you will get a takeout letter from a private insurer indicating that you have an offer now from the private market. And once again, the 20% threshold is you must accept the offer if it's within 20%, you could decline the offer if it's outside of that 20% threshold.
Talia Blake: Okay, Mark, that's actually the majority of my questions. Is there anything else you wanted to add in terms of the insurance market ahead of Idalia or just what homeowners should be aware of with this approaching storm?
Mark Friedlander: Our most important piece of advice is be prepared, be saved, and heed evacuation orders. We've learned last year devastation in southwest Florida. We saw many fatalities of people drowning from storm surge. It's always best to play it safe. You have insurance coverage for financial protection. Tt will cover your homes. It will cover your possessions. Those could be replaced, your lives cannot be replaced. So please, be very careful, certainly heed evacuation orders. Don't drive into floodwaters flooded streets. They can be very deceiving. Your car could be swept away and we just don't know what the storm is going to bring at this point. Be prepared, be safe, but your financial protection is through your insurance coverage.
Sandbag and shelter locations, updated closures, and the latest storm information is always available at wmfe.org/storms.
