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FLOIR pegs initial Ian insured loss estimate at $3.28bn. Will rise significantly

Initial data from the Florida Office of Insurance Regulation (FLOIR) reveals that more than 375,000 claims have been filed after hurricane Ian, mostly related to residential property, as the entity reports total estimated insured losses of close to $3.28 billion.

A total of 375,293 claims a little over a week after Hurricane Ian made landfall in the State of Florida is a fairly significant amount. The majority, 273,939, or 73% of these claims are for residential property, with 8,924 for commercial property, 1,210 for flood, 107 for business interruption, and 91,113 related to other lines of business.

Within the residential property claims reported so far, most (222,722) are from the homeowners line of business.

The figures are based on data as of October 6th, 2022, and, as of this date, the FLOIR estimates insured losses from the event of almost $3.28 billion.

While it’s useful to see early data on the number of claims filed and within which line of business, a look at the potential costs of the claims reported so far by the FLOIR suggests that the financial toll could already be more than $10 billion.

 

2017’s hurricane Irma is the closest major Florida landfalling hurricane to compare with hurricane Ian’s claims data. The storm made landfall in Florida on September 10th, 2017, and just 10 days later the FLIOR reported that more than 372,000 claims had been filed.

This is a relatively similar amount to the number of reported claims from Ian roughly 10 days after it made landfall along Florida’s coastline, so serves as a useful comparison.

However, with Irma, the FLOIR reported that the initial insured loss estimate from the 372,000 claims stood at just shy of $2.17 billion, which is substantially lower than the initial estimate for Ian.

It’s safe to assume that a key driver of the difference is down to inflation when you consider that in basic terms, the average inflation rate of a dollar from 2017 to 2022 was around 3.86% per year, which provides a cumulative price rise of almost 21%.

Of course, this is just dollar value inflation, so does not account for higher labour and increased material costs as a result of supply-chain issues.

According to the FLOIR’s data on Irma, as of November 9th, 2020, total claims reported stood at 1,125,588, with 729,786 of these claims closed with payment. As of this date, the FLOIR’s total estimated insured loss for Irma amounted to almost $21 billion. It’s important to remember that the FLOIR’s loss estimates are always lower than the main industry loss estimates, as they focus solely on Florida and only include underwriters that report to it.

Nevertheless, if you divide the FLOIR’s insured loss total for Irma by the number of reported claims closed with payment, the average stands at cost close to $28,330.

Taking the average claims cost for Irma and applying it to the 375,000 claims already received for Ian, gives you an insured loss figure of more than $10.6 billion.

If you then apply a 21% rise for basic dollar inflation to the average claims cost from Irma this number rises to $33,996, which, if applied to the reported number of claims for Ian, raises the insured loss to nearly $12.76 billion.

Of course, not all of the claims filed so far will result in a payout, but when you consider that reported Irma claims by the FLOIR increased to 1,125,588 compared to the initial 372,000, it’s fair to assume that reported Ian claims will likely more than quadruple in the months and years ahead.

In terms of estimating losses from the significant impacts of Ian, it’s still very early days. This morning, CoreLogic released an updated insured loss estimate of between $31 billion and $53 billion for Ian’s wind and flood in impacted states.

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