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Business Brief: Insurance Competition, Diversity Helping Companies Weather Hurricanes

trees down in Jacksonville during Hurricane Matthew
Cyd Hoskinson

Many Northeast Florida residents are making calls to their insurance companies after Hurricane Matthew. WJCT Business Analyst John Burr spoke to one local agent about how big storms affect the industry. He tells News Director Jessica Palombo about it in this week’s Business Brief.

State Farm agency owner Matt Carlucci, based in San Marco, knows the drill. Carlucci, a former City Council president and an insurance agent for more than 30 years, says most of the claims he’s been seeing involve wind damage, specifically fallen trees.

“We haven’t been hit by a hurricane since 1964 — Hurricane Dora — and because of that we have a huge inventory of large, heavy oak trees, and when you combine the extra weight that they acquire from the rain, through the moss and getting into the wood and the soft ground, you just know that they’re going to start coming down,” he said.

That squares with initial statistics from the insurance industry regarding Hurricane Matthew, which say 90 percent of claims filed so far have been related to wind damage, with 10 percent from storm surge. The total damage in the U.S. from the storm has been estimated at $10 billion—and climbing—with about $6 billion being insured.

That leaves $4 billion in uninsured damage, including flooding, which is not covered by a typical homeowner’s policy, and fallen trees that land in a yard and do not hit a building. Removing some of those large oaks from a yard or driveway can cost $4,000 or more, Carlucci said, and are a big hardship for people who cannot afford to pay.  The city has set up a fund that can help people who can’t afford to pay for tree removal, he said.

Carlucci said the property insurance industry in Florida is in strong shape, thanks in large part to a decade of no major hurricanes hitting the state. He said the industry has changed considerably in the last seven years, as dozens of smaller property insurance companies have sprung up across Florida at the same time major insurance companies were leaving the state.

The smaller startups have developed their own market niches and filled the void.

“Some companies will say, ‘You know what, our niche will be just newer homes,’ some companies say, ‘Our niche will be just older homes,’” Carlucci said.  Others specialize in just one region, like Central Florida or coastal communities.

That competition and diversification has spread the risk out among companies, making the insurance industry stronger overall, while at the same time leading to lower rates for property owners, he said.

WJCT Business Analyst John Burr is a veteran journalist who has been been directing news coverage and reporting in Jacksonville since 1983. He is currently also a news analyst for WJCT, where he can be heard regularly on the "First Coast Connect" media roundtable.