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Hurricane Milton Threatens Florida Insurance Market with Massive Losses

As Hurricane Milton barrels toward Florida’s Gulf Coast, the state’s fragile homeowners insurance market faces its toughest challenge yet.

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The Category 5 storm is expected to inflict as much as $10 billion in insured losses, according to a report from KBW analyst Meyer Shields. If the storm hits densely populated areas like Tampa, losses could skyrocket to $100 billion. This comes on the heels of Hurricane Helene’s recent $11 billion in damage, further straining insurers who are already stretched thin.

Florida’s homeowners insurance market is uniquely vulnerable. High premiums, a history of fraud, and the exodus of major national insurers have left the state dependent on smaller, local players. Citizens Property Insurance, a state-run mutual insurer, and Universal Insurance Holdings (UVE) are among the few companies still providing coverage in a market where many have fled due to risk.

Reinsurance Vital to Surviving Milton’s Impact
In a worst-case scenario, Hurricane Milton could cause $175 billion in total damages, according to meteorologists at BMS Group. Insurers are bracing for what could be a once-in-a-century event. For companies like Citizens Property Insurance, which has insured property worth $444 billion, the key to survival lies in reinsurance. The state-run insurer recently purchased $3.6 billion in reinsurance for the 2024 hurricane season, giving it some cushion. However, with the storm’s unpredictability and the potential for unprecedented damage, even these precautions may fall short.

Universal Insurance Holdings, with an 8.5% share of Florida's homeowners market, is also at significant risk. The company reported underwriting losses of 3% last year, despite relatively mild hurricane activity. Another severe hurricane season could plunge Universal and others into further losses, increasing financial pressure on an already unstable market.

Airlines and Travel Stocks Brace for Impact
The insurance industry isn’t the only sector feeling the brunt of Hurricane Milton’s approach. Airlines have begun canceling flights and adjusting schedules as Florida airports brace for the storm. Tampa International and Orlando International, two of the state’s busiest airports, are closing their doors in preparation for Milton’s arrival.

JetBlue Airways (JBLU), Allegiant Air, and Sun Country Airlines are among the most affected, according to analysts at Raymond James. JetBlue has already canceled 92 flights, and Allegiant has grounded 41, with more expected in the coming days. The storm threatens to disrupt travel demand, potentially leading to further financial losses for these airlines, which are already grappling with the fallout from Hurricane Helene.

As Florida braces for Milton’s impact, all eyes will be on the insurance and travel industries to see how they weather the storm. With potential damages reaching record-breaking levels, both sectors could face significant financial strain in the aftermath of this devastating hurricane.


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