FLORIDA – Colorado State University’s (CSU) preseason hurricane forecast could potentially have a detrimental effect on Florida’s property insurance rates.
Industry experts said insurance companies may be forced to raise consumers’ premiums to protect themselves in case of major storms.
CSU predicted an extremely high number of hurricanes for the upcoming 2024 season, which begins on June 1. Researchers are calling for 23 named storms when an average season has only 14.
“When most of the modelers are indicating it’s going to be very active season, that’s going to trigger the global reinsurance market to reassess risk,” said Mark Friedlander, spokesperson for the Insurance Information Insititute.
Insurance companies reassessing their risk could mean some insurance companies may request to raise their property insurance rates to cover their reinsurance rates, according to Friedlander.
Reinsurance protects insurance companies and shields them from financial distress. The threat of hurricanes earlier in the season..could mean higher premiums for Florida homeowners.
“It is a very ominous forecast, and certainly one of the most significant in terms of potential events that we’ve ever seen in April. So all you know, when the conditions are ripe for hurricanes, let’s be honest, we have record sea surface temperatures in the Atlantic,” Friedlander said. “I mean, this year, the Atlantic had temperatures at a level you typically see in the summer. And this was in the winter, the winter months, were showing summer-level temperatures in the Atlantic, a big generator of cyclones.”
Friedlander said insurance industry experts are also concerned about the changing atmospheric condition from an El Niño pattern to La Nina’. He said Florida’s property insurance market has made substantial gains over the past two years, saying major storms impacting the state directly could impact that trend.
Floridians will have a better understanding of what to expect in June.
“So we just have to kind of see what the June one renewals look like. That’s really the target date, when most Florida insurers purchased their reinsurance. So we’ll have to see how this plays out,” he said.
Friedlander said the good news is that eight new property insurers have been approved to write property insurance in Florida already this year.. these new companies will help consumers shop for new rates.