While storms Harvey, Irma and Maria have wrought widespread, costly damage across several U.S. states and territories this year, insurance experts say homeowners are unlikely to see substantially higher insurance premiums as a result of the busy hurricane season.
Insurance rates are determined on a state-by-state basis, with providers giving consideration for each locale based on perceived risk and past data on insured losses. Each storm brings unique circumstances that affect how rates change in the future. An Associated Press report last month found that roughly 80% of homeowners impacted by Hurricane Harvey did not have flood insurance, meaning that the storm’s destruction was not necessarily a major blow to local insurers.
“Though it might be too early to tell, it’s generally felt that the cost of insurance won’t change too dramatically in these affected areas,” Jason Turner, an insurance expert and CEO of Venbrook Group, told FOX Business. “Right now, it looks like most of the losses were uninsured and won’t affect these carriers like we have seen in other disasters like Katrina, Andrew and Hugo.”
Experts are still tallying the damage that Hurricane Harvey caused along the Texas Gulf coast and Hurricane Irma caused in Florida. Early estimates suggest Harvey’s insurable costs rise as high as $25 billion to $30 billion, the Washington Post reported, while Florida’s state insurance regulator said local policyholders had filed nearly $2 billion in claims as of Monday.
While officials are only beginning to assess Irma’s long-term financial impact, Turner says the expected losses, while severe, are unlikely to translate into increased homeowner insurance rates.
"Irma will be seen as a major event for Florida. Carriers will experience an underwriting loss undoubtedly. But given the abundance of capital in the marketplace, the current outlook is that it's still unlikely to equate to price increase to homeowners,” Turner said.
But higher rates are only part of the risk to homeowners in the wake of the major storms, according to Doug Jones, managing partner of Miami, Florida-based JAG Insurance Group. The busy hurricane season could cause some insurers to think twice before re-entering storm-stricken regions, leaving customers with fewer, less desirable options.
“What we are seeing more is that some carriers are timid to open back up for new business both due to the damage caused by Harvey and Irma, but also because of the constant storm activity approaching the United States,” Jones said. “This will leave those without insurance with few options, and those with coverage at the mercy of their current carrier upon renewal.”
Hurricanes Harvey and Irma delivered back-to-back blow to the southern United States, and the Atlantic hurricane season generally runs through November. This week, Hurricane Maria dumped more than a foot of rainfall on Puerto Rico and knocked out power to the entire island.
Still, Jones says the unusually active hurricane season is unlikely to yield higher property insurance rates.
“Overall, the insurance industry will see very little, if any, rate increase from current national (and international) catastrophes,” Jones said. “The reinsurance market remains a hot investment and therefore allows for property insurance rates to stay at a 10-year low.”