Al Diaz | Miami Herald | TNS | Getty Images
Ben Cosme installs hurricane shutters at Key Largo Chocolates in Key Largo, Florida in preparation for Hurricane Irma on Wednesday, Sept. 6, 2017.
Florida’s situation is somewhat unique: Most of the mainline insurers have fled the state, leaving a good portion of the coverage to Citizens Property Insurance. There are worries that the insurer wouldn’t have the resources to support the losses and that the state would have to step in.
However, an official at Florida Citizens insisted that is not the case.
“We are in very good financial shape as the state’s insurer of last resort,” said Michael Peltier, media relations manager at Citizens. “We have ample surplus to cover incredibly severe storms, so we don’t want our policyholders to worry about that at this point.”
Concerns have been raised over the years about whether Citizens has enough cash reserves to cover its risk. Peltier said the company has used experience as a guide to make sure it has proper capital levels.
“We are as best prepared as we’ve been since we were created back in 2002,” he said. “We learned a lot after ’04 and ’05 and have been using the stormless years since then to bolster our response capabilities and put our financial house in order.”
Reinsurers are taking the biggest hit so far. The firms act as backstops for insurance companies in the case of catastrophic events, and the financial hit will be substantial.
As Florida has sought ways to make sure more property owners hold flood insurance who are not participating in the national program, the private insurers themselves have turned to the reinsurers for help. Reinsurers including Renaissance Re, Validus and XL Group have drawn business as part of the trend.
Irma will be the first major storm to see how the system holds up.