Newsweek: “Florida Insurance Market Braces for Hurricane Season”
RFF Fellow Penny Liao comments on how the upcoming hurricane season may affect costal insurance markets.
Penny Liao, an economist and researcher at Resources for the Future, agreed that hurricanes this year could potentially destabilize insurance markets that are already vulnerable, "especially if they hit highly populated areas in Florida, Texas, and Louisiana," she told Newsweek.
"The Florida market currently consists of many small and local insurers that are not well capitalized and rely heavily on reinsurance," Liao said. "If insured losses end up being very high, we might see insurer insolvencies and withdrawals, as well as higher premiums in the following years due to the increase in reinsurance costs."
Large hurricane losses might also trigger additional assessments from state-backed programs such as the Florida Hurricane Catastrophe Fund and the Florida Insurance Guaranty Association on policyholders, Liao said, "which will add to insurance costs down the line."
