On the heels of Harvey exposing Houston to the need for Flood insurance and additionally the inadequacy of the National Flood Insurance Program (NFIP), Irma, heading for Florida may be much worse.

If you have insurance with a major insurance company, any wind damage claims from Irma may be slow, but you should get paid. Major insurers have been responsible when providing insurance in that they require wind protection on properties as a requirement to buy insurance, protection that Irma will prove appropriate.

But in the last 10+ years the lack of Hurricanes have spawned a large number of micro insurance companies with very aggressive rates and little or no requirement for wind protection. Our investigation showed that these insurers are writing business primarily in Florida, and that is a huge problem. Additionally, the reinsurers who back these companies have taken the lack of hurricanes as an incentive to push down rates without any wind protection as well.

Flood, available only thru the NFIP, will only add insult to injury.

It’s interesting to read in the Wall Street Journal about a homeowners surprise that they have a separate wind deductible of 1%, 2%, or even 5% of their building coverage. But I think the problem is much bigger in that these micro companies will collapse under the weight of the claims.

In my opinion if Irma hits south Florida, this will be a disaster and the response from any insurance company other than a major insurance provider could be very ugly.


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