Sam Miller of the Florida Insurance Council said the Florida market is dominated by state-backed Citizens Property Insurance Corp., local insurers who operate only in Florida, and a smaller number of Florida-only subsidiaries under a few national carriers.
“The price of homeowner’s coverage in Florida in the private market is predominantly driven by scientific estimates of the costs of exposure,” said Miller, FIC executive vice president. “Hurricane Sandy will not have a direct impact on these estimates.”
Lynne McChristian of the Insurance Information Institute (III) said Sandy’s effect on reinsurance markets should be minimal since much of the damage is from water, and that is covered by the National Flood Insurance Program.
“Rates charged for insurance in Florida are exclusively based on past and expected losses that occur within our state,” said III’s McChristian.
Both said Sandy shouldn’t have a dramatic effect on the cost of reinsurance either.
“Reinsurers enter Hurricane Sandy with historically high levels of capital, and access to increasing sources of additional private sector capital,” Miller said. “Reinsurers, rating agencies and analysts expect vigorous, comprehensive competitive conditions to prevail in 2013, even considering potentially significant regional losses from Hurricane Sandy.”
However, Florida business and homeowners have experienced sharp increases in recent years on property policies although the state has not seen a hurricane since Wilma in October 2005.
All increases on property insurance premiums must be approved by the Office of Insurance Regulation (OIR), which is recent years has consistently given its OK to hikes – often times by double digit amounts.
OIR spokesman Jack McDermott said it would likely be January at the earliest before regulators would see how insurers respond to losses from Sandy in future rate requests.
“We may begin seeing some impacts of the storm at that time,” McDermott said.
Copyright © 2012 The Associated Press, Brent Kallestad.