Gallagher’s Bane: Florida commercial property buyers facing capacity shortage in 2023

Florida-based commercial property insurance buyers were already set for a tough 2023 before Hurricane Ian hit, with Arthur J Gallagher’s Martha Bane telling The Insurer TV she forecasts there will be a supply and demand issue in the Sunshine State next year.

Residential property has drawn much of the focus in the weeks since Hurricane Ian made landfall in Florida. Claims from residential property will make up the vast majority of those filed from the storm.

Within the 509,197 claims recorded by the Florida Office of Insurance Regulation as of 13 October, 360,927 were related to residential property losses.

But Bane, who has served as Gallagher’s property practice leader since 2012, told The Insurer TV that hotels, hospitality, retail and industrial property have also been significantly impacted by the storm.

Statistics from the FLOIR show that of the 360,927 residential property claims, 1,859 relate to commercial residential property, while a further 18,044 commercial property claims have also been filed.

Bane noted that Gallagher has a lot of municipality clients, and she highlighted how cities and counties have suffered damage to their infrastructure with bridges, roads and utilities all needing to either be repaired or replaced. Schools and religious institutions have also been impacted, she said.

From a construction type, Bane said “it’s really that kind of wood frame construction on low lying property that we saw most damaged”, while high rise concrete buildings suffered less damage.

The difficulties facing Florida’s residential property insurance market have been well documented by this publication, and it is a similar state of affairs in commercial property with carriers having scaled back writing catastrophe exposed business in response to repeated losses.

Indeed, Bane said Florida’s property insurance market “was already probably the most volatile in the US” prior to Hurricane Ian hitting.

“As other parts of the US saw some moderation of rate, that just was not happening in Florida. Carriers continue to pull back on their capacity,” Bane said.

“In the commercial space we do expect rates to go up dramatically in Florida, as well as other wind-exposed areas and coastal properties,” she noted.

“It’s going to create some challenges [in] securing the capacity our clients need. It’s going to be harder than before [and] I think there’s going to be a supply and demand issue in Florida,” Bane added.

Watch the full five-minute video with Martha Bane, Arthur J Gallagher’s Property Practice Leader, to hear more on…

  • Whether insureds’ commercial property values were accurately assessed in light of inflation
  • Potential difficulties regarding demand surge
  • The storm’s potential impact on the broader US commercial property market