Predictions of a busy hurricane season won’t drive up insurance costs, USF faculty say

• May 7, 2024
• Campus News, Research, Students

By Marc R. Masferrer, University Communications and Marketing

Forecasts of an active 2024 hurricane season, which officially starts June 1, might make Florida homeowners fear their property insurance is about to get even more expensive. However, Randy Dumm, director of The Baldwin Group School of Risk Management and Insurance at USF Sarasota-Manatee, said there is not a direct link between the forecasts and what it costs to insure your home this year.

Insurance markets, Dumm said, are more complex and more competitive than that, and the catastrophic risks associated with Florida's weather are already embedded in what homeowners pay in current premiums. Reinsurers may want to price hurricane risk based on the possibility of heightened hurricane activity at the June 1 renewals but even there, competitive market forces will likely limit the impacts, Dumm said.

Price spikes, as any Floridian who was around for, say, the aftermath of the prolific storm seasons of 2004 and 2005, Hurricane Irma in 2017 or Hurricane Ian in 2022, usually result from what actually occurs.

The predictions of an active season in the Atlantic basin, with more frequent and more intense storms, are based on science but they do not indicate what is going to happen at a specific location.

"Those who have been through active hurricane seasons here in Florida know that regardless of the season forecast, it is a reminder to be prepared," said Dumm, who has more than two decades of experience studying and making recommendations on how to improve the catastrophic insurance market in Florida.

It's all about properly managing the risks of living in Florida during hurricane season, a subject that comes up frequently in classes offered by The Baldwin Group School of Risk Management and Insurance.

Some tips on how Florida homeowners can protect against potential loss and rising premiums

With less than a month to go before the start of hurricane season and with so many unknowns, what can Floridians, when it comes to their insurance coverage, do to prepare?

Dumm said there are several basic steps a homeowner can take at this point:

• In terms of coverage, homeowners should make sure they are adequately insured. They should inform their agent of any significant additions or other renovations to their home and ask them to make sure they are receiving all available premium discounts and credits available for roof and other improvements.
• If the policy is renewing in the next 30 days, homeowners should ask the agent to provide competing quotes when possible. If the agent only represents one company, ask another agent for a quote. Based on location, options might be limited but the process may provide useful information.
• If in Citizens or the policy is being non-renewed, homeowners should be proactive in attempting to find potential insurers in the private market. Insurance agents should be able to help here.
• Consider increasing the deductible if the premium saving is meaningful, but homeowners should ensure that the higher deductible is affordable if a loss occurs. The delay in repairing or rebuilding because the homeowner can't pay their share of the loss is not worth the premium savings.

"If you were thinking about replacing the roof because the roof is old, then consider doing that sooner rather than later as roof strength/integrity is the largest factor in how a house performs when the wind blows. The strengthening of the building code across time means that not only will the shingles be new, but building code requirements increase the performance of the house in a hurricane and makes it more likely your structure will stand," Dumm said.

Dumm recommended homeowners check out incentives available through the state's My Safe Florida Home program, which helps Floridians pay for the hardening of their homes and that could save them much more later if a storm hits. Gov. Ron DeSantis last month signed legislation that will add $200 million to the program for the upcoming fiscal year.

Related story | Hurricane preparedness takes many forms. USF providing support on all fronts

Risk management and insurance at USF

As a Florida-based program, Dumm said The Baldwin Group School of Risk Management and Insurance at USF Sarasota-Manatee is perfectly situated to conduct research, for example, on the various economic, psychological and social forces that can affect the insurance market; and to prepare students to enter a workforce in need of younger professionals to replace those who are retiring.

"We're a risk-based program sitting in the heart of the largest catastrophic wind market in the world," Dumm said. "I can't think of a more interesting market to research or study catastrophic risk."

Students on all three USF campuses are being drawn to the expanding program, and not just because all undergraduates in the Muma College of Business eventually will be required to take at least an introductory course on risk management and insurance.

"Many of them are Floridians," Dumm said. "They have an awareness from their families that the cost of homeowner insurance is a factor, and they find that the size, scale, and complexity of Florida's insurance market interesting."

One of those students is Madison Siefert who, this past semester, took Associate Professor Steven Miller's Natural Disasters and Community Recovery course.

Miller said the course fits with the RMI program's goal of working with industry "to equip our students with the skills to innovate new solutions."

"Our course draws from a variety of research fields - insurance economics, risk assessment, sociological impacts, cultural impacts - to gain insights into resilience puzzles such as 'shadow evacuation' (when residents evacuate unnecessarily) or biases that impair people's ability to evaluate catastrophe risk," Miller said. "Then we get creative. Our students are encouraged to have fun, push boundaries and identify opportunities to make an impact."

A student's advice

For the class, Siefert, a lifelong Sarasota resident majoring in risk management and insurance, wrote a paper about what happened in Fort Myers, before, during and after Hurricane Ian hit in September 2022. That included controversies about whether officials issued evacuation orders that actually gave residents time to evacuate before the storm's landfall, and why many residents did not heed the warnings, to their peril.

"Hurricane Irma happened (in 2017), and a good portion of those who heeded the evacuation orders and returned to their homes unscathed, underestimated their risk for Hurricane Ian. I think one of the main issues with Hurricane Ian was that people didn't know their risk and how quickly these hurricanes can change," Siefert said.

So, what would Siefert, founder and former president of the USF chapter of Gamma Iota Sigma fraternity for students interested in RMI careers, advise students or other area residents do as they consider the risks and prepare for what could be a busy 2024 hurricane season?

"Know your flood zone," Siefert said. "I think there are quite a few people who don't understand it or they just don't really understand the maps. Know your risk and know your home, as well."

Sarasota County residents can look up their flood zones by clicking here. For information about flood zones in Manatee County, click here.

Other hurricane preparation tips from Florida state government can be found here.