Hurricane Ian nears landfall on the Gulf Coast of Florida in the midmorning of Sept. 28. The Category 4 storm is widely anticipated to cause major damage from high winds, dangerous storm surge and flooding.
A sharp rise in policies in force along Florida's Gulf Coast leaves Citizens Property Insurance Corp. particularly exposed to the "1-in-100-year" wind and storm-surge damage expected from Hurricane Ian.
State and local officials issued mandatory evacuation orders for at least a dozen counties in southwest Florida, including Charlotte, Citrus, Collier, Hernando, Hillsborough, Levy, Lee, Manatee, Pasco, Pinellas, Putnam and Sarasota. Highlands, Taylor and Glades counties were under voluntary evacuation orders. Even some portions of northeast Florida were ordered to evacuate due to the prospect of significant flooding.
Citizens has nearly 307,000 personal residential policies in force in Florida counties with at least partial or full mandatory evacuation orders, leaving it with potential exposure of about $102 billion within its personal residential accounts, according to an S&P Global Market Intelligence analysis.
That represented an increase of more than 100,000 policies in the span of about a year. Citizens had 203,883 policies and $55.72 billion of exposure in those areas as of Aug. 31, 2021.
Ian's arrival comes at a time when Florida's property and casualty market is experiencing major turmoil with several insurers failing amid a perfect storm of claims inflation, litigation and reduced reinsurance capacity.
As a result, Citizens' risk profile has subsequently changed significantly compared to last year. Its exposure in Hillsborough County, of which Tampa is a part, ballooned 124.6% year over year to $19.43 billion, while the number of policies in force grew 81.9% to 53,408. Exposure in Pinellas County, which includes the city of St. Petersburg, has risen 56% year over year to $33.36 billion. Policies in force there grew 34.7% to 102,099.
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An analysis from CoreLogic showed that just under 1.1 million single-family and multifamily homes along the Florida Gulf Coast are under threat from the storm surge, which could translate into a reconstruction cost value of approximately $258.3 billion.
Citizens spokesman Michael Peltier said in an email said the insurer of last resort faces around $3.8 billion in losses and 225,000 claims from Ian, according to preliminary estimates.
'Catastrophic' storm surge expected
Ian is expected to make landfall as a Category 4 storm between Port Charlotte and Cape Coral around 2 p.m. ET on Sept. 28, packing winds upward of 155 mph, according to the National Hurricane Center.
Those winds are expected to generate a "catastrophic" storm surge of between 12 and 16 feet from Englewood to Bonita Beach, including Charlotte Harbor. Storm surges of 6-10 feet are expected from the middle of Longboat Key to Englewood. Surges of 8-12 feet from Bonita Beach to Chokoloskee, and 4-7 feet in the Tampa Bay area, are also forecast.
Dan Kottlowski, a senior meteorologist for AccuWeather, said those kinds of surges have not been seen on the Florida Gulf Coast since the 1921 hurricane that came ashore at Tarpon Springs, located north of Tampa Bay. That storm generated a surge of 11 feet that inundated the majority of the bay area and took a track similar to the one Ian is on.
Over the course of the development of the Gulf Coast, from 1950 onward, the highest recorded storm surge from a tropical storm has been 4 feet. Ian was expected to make landfall at Tampa Bay, but a movement to the east overnight on Sept. 27 sent it on its current track.
"Tampa Bay is not going to have nearly the storm surge that we were worried about," Kottlowski said in an interview. "Still though, from Cape Coral down to north of Fort Myers, they could get a devastating storm surge in those areas."
Universal, First Protective in Ian's path
The largest domestic residential property insurer in the Sunshine State, which excludes national carriers, is Universal Property & Casualty Insurance Co.. The Universal Insurance Holdings Inc. subsidiary has $914 million in direct premiums written for the first half of 2022. Net premiums written, which takes reinsurance into account, total $228.9 million. About 85% of the company's total direct premiums for this year were written in Florida; quarterly regulatory statements do not provide a state-level breakout by line of business.
Of all the insurers in this analysis, First Protective Insurance Co. recorded the largest net premiums written of $284.2 million during the first six months of 2022. The insurer had $461.9 million in total direct premiums written during the same period, with almost 78% coming in the Sunshine State.
