WEATHER

Florida insurance industry prepares for Hurricane Matthew

CASEY LOGAN
CLOGAN@NEWS-PRESS.COM
Edwin Almaras prepares his family's mobile home Wednesday for Hurricane Matthew in Clewiston, Florida.

The insurance industry prepared Thursday for the devastating blow Hurricane Matthew threatened to deliver to Florida’s east coast.

Citizens Property Insurance, often called the state’s insurer of last resort, was “in full preparation mode," according to spokesman Michael Peltier.

Citizens was created in 2002 to provide windstorm coverage and general property insurance for homeowners who could not obtain insurance elsewhere. Citizens has fewer than 490,000 policies after an effort to “depopulate,” since insuring as many as 1.5 million policies at its peak in 2012.

“We have contacted our independent adjusters, getting those people up and running for potential use,” Peltier said from Tallahassee. “Over the course of the last 10 years, we have ramped up our emergency response capabilities. Financially, we’re in the best position we’ve ever been in.”

Citizens has a $7.5 billion surplus. It also has “prudent reinsurance” and access to the Florida Hurricane Catastrophic Fund, also known as the CAT Fund, if needed. That fund has about $17.4 billion available.

Hurricane Wilma, the last hurricane to make landfall in the state until Hurricane Hermine lashed north Florida a month ago, caused an estimated $10.3 billion in property insurance losses. The Category 3 storm came ashore south of Naples in October 2005.

Four hurricanes in 2004 alone caused more than $45 billion in estimated property damage. Many insurers, feeling the market was too risky, left Florida after the hurricane seasons of 2004 and 2005.

“After 2004-05, we put together contracts to make sure we have the volume of independent adjusters we need,” Peltier said. “We have companies we deal with and have contracts that employ groups of public adjusters.”

About 1,000 adjusters are preparing to be deployed after Hurricane Matthew, he said. How many ultimately hit the streets depends on the path the storm takes.

“If we need them all or we need more, we have access to more,” he said.

Lynne McChristian, the Florida representative for the Insurance Information Institute, said “the insurance industry is well capitalized” to respond to a major disaster. The nonprofit helps the public better understand the industry.

“They have the resources to pay the claims,” she said. “They have experience from looking at what happened to Florida in 2004 and 2005 and they’ve had 11 years to build up the resources to pay for catastrophic losses. They’re ready.”

As the hurricane departs and the damage begins to be measured, McChristian encouraged people to view initial damage estimates with a skeptical eye.

“Data needs to be collected,” she said. “There are claims that come in initially and continuing costs that pile up in the days afterward. It takes a while for the true numbers to be known.”

Hurricane insurance: 13 things to know before the wind blows

When a hurricane or tropical storm threatens any part of Florida, Citizens Property Insurance stops writing new policies or adding coverage to existing policies throughout the state. That suspension went into effect late Tuesday morning.

In Southwest Florida, Tim Shaw of Tim Shaw Insurance said “we’re pretty much shut down” as the hurricane churns.

Other Florida property insurers tend to be less restrictive and only suspend writing policies in those areas under a tropical storm or hurricane watch or warning. Southwest Florida has been under a tropical storm watch that is expected to remain into Saturday.

“All of our carriers have suspended any buying authority or endorsements,” Shaw said. “We are getting calls. It’s too late. It’s pretty dead as far as getting any work done.”

In the meantime, Shaw said this hurricane should serve as a good time for consumers to re-evaluate coverage and contemplate buying flood insurance to protect from storm surge.

“So many don’t think they have a flood issue,” he said. “These kinds of storms are a wake-up call to those people. Consider flood insurance. It’s not that expensive.”

Connect with this reporter: email clogan@news-press.com and follow on Twitter @caseylo

What can you do?

  • Take a home inventory. Do a room-by-room assessment at a website such as KnowYourStuff.org. Load pictures in the cloud and access it from anywhere.
  • Make sure you have a copy of your insurance declarations page. Know your policy number and deductible amount, which is on that declarations page.