Citizens Property Insurance Corporation, a not-for-profit alternative insurer, has updated its Hurricane Ian estimates to reflect additional costs expected from litigation and other claims-related expenses.
Citizens now estimates that direct loss-adjustment expenses related to the Category 4 storm, which slammed into Florida in September, will total $3.8 billion. That’s a sharp spike over the preliminary estimate of $2.3 billion to $2.6 billion, which was based on the results of a single hurricane model.
The revised projection incorporates the results of a second model, accounts for actual claims activity to date, and includes additional provisions for litigation costs and inflation, Citizens said.
Of the $3.8 billion in direct losses and loss-adjustment expenses, Citizens projects that $1.4 billion will be ceded to the Florida Hurricane Catastrophe Fund and private reinsurance. The catastrophe bonds the insurer has in place are not expected to be triggered. After consideration of this reinsurance, the net impact to Citizens’ surplus is $2.4 billion, the company said.
The insurer stressed that these are early projections of ultimate costs that will take years to fully mature. The projections will be re-evaluated at the end of the year, when Citizens will have a full three months of actual claims activity to analyze.
Read next: Florida insurer losses spiral after Hurricane Ian
Hurricane Nicole, which hit Florida’s east coast on Nov. 10, is still being evaluated, but is not expected to have a major financial impact on Citizens, the company said.
“We will continue to update the market and other stakeholders as we gather additional information from actual losses,” said Jennifer Montero, chief financial officer at Citizens.