Focus on FEMA, NFIP, plus latest storm payouts
Florida insurance regulators want more information on federal flood insurance claims problems following hurricanes Debby, Helene, and Milton; FEMA borrows $2 billion from the U.S. Treasury to pay Helene and Milton flood claims; and Florida carriers have paid $6.4 billion to date in claims from the storms. It’s all in this week’s Property Insurance News.
OIR Data Quest: The Florida Office of Insurance Regulation (OIR), stating it “recently learned of potentially concerning behavior relating to anti-concurrent causation policy language and the explicit avoidance of applying coverage for policyholders,” issued an informational memorandum to property insurance companies on February 20. It reminds carriers to be sure they’re properly evaluating property damage claims caused by both wind and water damage from the 2024 hurricane season. Many Florida policies have an anti-concurrent causation clause which authorizes the carrier to use experts to determine wind vs. flood damage and to settle the claim according to the policy coverage.
The OIR memo also addresses federal flood policies from the National Flood Insurance Program (NFIP). OIR notes that the Florida Department of Financial Services “has received a significant number of flood-related consumer complaints relating to timely payment of claims, inaccurate claims payments and post-claims underwriting.” OIR is ordering Florida carriers that write NFIP policies under the Write Your Own (WYO) Program to provide additional information to OIR by close of business this Thursday (March 6). This includes the names of vendors that provide claim handling services, a copy of any claims-handling manual apart from the NFIP’s own, and most interestingly, a “written statement that explains weaknesses and set-backs the insurer and claims-handling entit(ies) have identified in the NFIP’s claims handling process.” It appears Commissioner Yaworsky is expressing concern about delays in payment of NFIP claims.
NFIP Claims: FEMA, which runs the NFIP program, announced last month that Hurricanes Helene and Milton “depleted” the NFIP’s premiums. So it has borrowed $2 billion from the U.S. Treasury to cover the claims. Its February 10 press release reports Helene generated more than 57,400 flood insurance claims across the states, totaling more than $4.5 billion. FEMA now estimates total claims losses will end up being between $6.4 to $7.4 billion. Hurricane Milton has received more than 21,100 flood insurance claims so far, totaling $740 million. Total claims losses are now estimated to be between $1.2 to $2.9 billion. The release notes that the NFIP has borrowing authority of $30.425 billion. It borrowed $20.53 billion to cover hurricanes Katrina, Sandy and Harvey, and now another $2 billion for Helene and Milton. This is another reminder that flooding continues to be the costliest and most frequent natural disaster in the U.S.
Florida’s Hurricane Payouts: OIR’s latest report as of February 19 shows that Hurricane Helene has generated 149,000 insurance claims worth $2.4 billion in insured losses. Just under 88% of those claims are now closed, with an almost 2:1 ratio of paid-to-unpaid claims. Of the 46,270 claims closed without payment, just over 25,000 were below the policy deductible or for non-covered flood damage.
OIR’s February 11 data shows Hurricane Milton has generated 338,000 insurance claims worth $4 billion in insured losses. Just under 80% of those claims are now closed, with a 5:4 ratio of paid-to-unpaid claims. Of the 116,710 claims closed without payment, 54,256 were below the policy deductible or for non-covered flood damage.
LMA Newsletter of 3-3-25
