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Citizens Increases Hurricane Ian Loss Estimates

The Fla.-owner insurer announced a notable increase in expected losses at $3.8B, an increase from the $2.3-$2.6B estimated previously.

TALLAHASSEE, Fla. – Citizens Property Insurance Corporation – the Florida-owned “insurer of last resort” – updated its Hurricane Ian estimates to reflect “additional costs expected from litigation and other claims-related expenses.”

Citizens now estimates direct losses and loss adjustment expenses totaling $3.8 billion from the Category 4 storm that slammed Southwest Florida on Sept. 28, 2022. The latest number is a notable increase over the preliminary estimate of $2.3 billion to $2.6 billion Citizens offered earlier.

Citizens says the lower estimate was “based strictly on the results of a single hurricane model.” The revised $3.8 billion projection incorporates the results of a second hurricane model, considers the actual claims activity to date, and includes additional provisions for litigation costs and inflation.

Of the $3.8 billion direct losses and loss adjustment expenses, the revised projection anticipates that $1.4 billion will be ceded to the Florida Hurricane Catastrophe Fund (FHCF) and private reinsurance, which is essentially secondary insurance that can be tapped when losses exceed a predetermined amount. The catastrophe bonds Citizens has in place are not expected to be triggered.

After the consideration of reinsurance, the net impact to Citizens’ surplus is $2.4 billion, the company says.

Even the $3.8 billion estimate could change, however, and Citizens says it will take several years to fully mature.

Citizens says it’s in the early evaluation stages for Hurricane Nicole, which made landfall on Florida’s east coast on Nov. 10, 2022. However, the insurer says Nicole shouldn’t have a major financial impact for claims.

“We will continue to update the market and other stakeholders as we gather additional information from actual losses,” says Jennifer Montero, Citizens’ chief financial officer.

Citizens had 1.121 million policies on its books as of Nov. 11, 2022. Its policy count grew by about 363,000 since Jan. 1, 2022, a 47.7% increase, as Florida’s private property insurance market continues to face challenges.

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