Insurers' Helene loss estimates climb as Hurricane Milton nears Florida

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(Bloomberg) --Estimates for insured losses from Hurricane Helene have climbed to as much as $14 billion, even as insurers are preparing for more devastation from Hurricane Milton.

Private market insured loss estimates from Hurricane Helene range from $8 billion to $14 billion, with the best estimate around $11 billion, according to Moody's RMS Event Response. That's higher than the $6.4 billion that catastrophe modeling firm Karen Clark & Co. estimated last week.

Helene made landfall in Florida's Big Bend region in late September as a Category 4 hurricane, with sustained winds reaching 140 miles per hour. The storm wreaked havoc inland as far north as Ohio, bringing catastrophic flooding, killing more than 200 people and leaving millions without power. 

Florida is now bracing for Milton, a Category 4 hurricane that's headed toward the Tampa Bay region and could impact an increasingly populated area that also includes Orlando. Milton is expected to be more costly than Helene.

Read More: Hurricane Helene Insurance Losses Expected to Reach $6.4 Billion

Milton has the potential to result in tens of billions of dollars of insured losses if it hits the Tampa Bay area, according to early forecasting from Bloomberg Intelligence analysts. When Hurricane Ian hit Florida in 2022, it drove insurance losses to as much as $65 billion.

Higher Premiums

In recent years, increasing insurance losses in Florida tied to ballooning litigation costs and more frequent climate disasters have driven some insurers out of business or away from the state, forcing homeowners to pay higher premiums.

While recent reforms on the local legal system helped improve the situation, Milton's potential damage could cause further imbalance.

"Florida's market has been showing positive signs of improvement since the legislature passed important reforms to reduce legal system abuse in the state, but it remains to be seen what impact Hurricane Milton will have on the marketplace following the significant damage from Hurricane Helene as repairs are just getting underway," said Logan McFaddin, vice president of state government relations at the American Property Casualty Insurance Association.

Insurance stocks tumbled Monday, with local insurers taking the strongest hit. Fort Lauderdale-based Universal Insurance Holdings Inc. shares closed down 20%. The insurer has an 8.45% market share in the local homeowners' insurance market, according to the most recent market data by credit-rating agency AM Best.

Shares of American Coastal Insurance Corp., which generated 95% of its gross written premium in Florida last year, declined 15%. Another local insurer, Heritage Insurance Holdings Inc., with a third of its in-force premiums originating from Florida last year, tumbled 23%.

Some larger insurers presence in Florida, such as Progressive Corp., Allstate Corp. and Chubb Ltd., each recorded low single-digit share declines.

Insurers recouped some of the declines Tuesday, with the KBW Insurance Index rebounding more than 1% as of 12:04 p.m. in New York.

In emailed statements to Bloomberg, Allstate and Progressive said they're mobilizing their catastrophe teams to support customers after the storm.

Citizens Property Insurance Corp., the public insurer of last resort in Florida, and the leading provider of homeowners' insurance policies in the state, is urging policyholders to heed the advice of local authorities.