Milton insured losses could hit $50 billion: Fitch

Hurricane Milton will result in estimated insured losses in the range of $30 billion to $50 billion, and likely limit the potential for property catastrophe rate declines in 2025, Fitch Ratings Inc. said in a note issued Thursday.

The projected loss would rank Milton as the largest insured loss since Hurricane Ian, a strong Category 4 storm that took a similar path in 2022, causing $60 billion in losses.

Milton will push industry insured losses this year to over $100 billion for the fifth consecutive year.

“This heightened level of catastrophe losses will likely limit any potential for rate declines in property catastrophe business in 2025 as (re)insurers maintain underwriting discipline,” Fitch said.

In the property market, premium rates could harden, depending on ultimate Milton losses and if there are additional catastrophe losses this year.

“However, the sizable property reinsurance price increases experienced in 2023 are unlikely given the more adequate current pricing environment,” Fitch said.

Florida property experienced flat to 10% rate declines at June/July 2024 reinsurance renewals.

Milton will be a fourth quarter and 2024 earnings event for large insurers with Florida exposure but is unlikely to affect credit ratings for property/casualty insurers and global reinsurers given strong capital levels, Fitch said.

Florida property insurance specialists, which Fitch does not rate, are vulnerable if Milton generates losses in excess of reinsurance limits.

“The insurance losses will hit reinsurance attachment points, shifting a meaningful amount of losses to the reinsurance market, particularly from the Florida specialist companies with lower retentions,” Fitch said.

Ultimate losses will depend on demand surge as Milton follows on the heels of Hurricane Helene, a Category 4 major hurricane that hit the southeast U.S. just two weeks ago.

Higher demand for and limited supply of labor and materials needed to adjust claims and repair and rebuild following multiple large-scale disasters can increase insured losses by 20% or more, Fitch said.

Milton made landfall near Siesta Key, Florida, as a Category 3 major hurricane and traveled across central Florida before moving off the east coast as a Category 1 storm Thursday.

High winds, substantial storm surge, heavy rainfall, tornadoes and flooding caused considerable economic and insured losses, Fitch said.