Fitch Ratings believes that Hurricane Wilma is a further blow to an already weakened Florida insurance market, which it says has not realized an adequate return on capital since Hurricane Andrew in 1992.
Wilma, Fitch said, could prove to be the third-largest U.S. insured hurricane loss behind Katrina and Andrew if it comes in on the high end of estimates, and the fifth-largest U.S. catastrophe loss ever.
There is little incentive for a well-capitalized insurer to remain in the Florida market, Fitch said, or a start-up to capitalize well, leaving thinly capitalized insurers in the market. While they will report greater profits, these companies will be less able to survive extreme events.
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