Hurricane Andrew Made Nine Insurers Insolvent and Left 19 States a Percentage Hurricane Deductible

At 0835 UTC on 24 August 1992, the WSR-57 radar on the roof of the National Hurricane Center in Coral Gables took one last image of Hurricane Andrew. Then the wind took the radar off the building. The preliminary report Ed Rappaport later filed for the center still carries that image, captioned with the reason there are no others.¹

Half an hour later the eye came ashore at Fender Point, 8 nautical miles east-northeast of Homestead, with a central pressure of 922 millibars. Rappaport’s report called that the third lowest pressure of the century for a hurricane at a United States landfall. Andrew went into the record as a Category 4 storm with maximum sustained winds near 125 knots. A 2004 reanalysis by Landsea and colleagues raised the landfall winds to 145 knots, and on 7 February 2005 the Hurricane Center published an addendum making Andrew a Category 5.²

Twenty-six people died as a direct result of the storm. Counting the indirect deaths, most of them during the recovery, the toll reached 65. Andrew destroyed 25,524 homes and damaged 101,241 others. Up to a quarter of a million people in Dade County were left temporarily with nowhere to live. The Dade County Grand Jury found that ninety percent of the mobile homes in south Dade were totally destroyed. In Homestead the count was 1,167 of 1,176.¹

Exhibit. Preliminary Report, Hurricane Andrew, National Hurricane Center, updated 10 December 1993

Many of the reports came from observers who vigilantly took readings through frightening conditions including, in several instances, the moment when their instruments and even their homes were destroyed.

What Florida built out of that wreckage was a transfer. The state moved the first slice of every hurricane loss onto the homeowner, wrote the machinery into the statute book, and made insurers print the resulting dollar figure on the declarations page in type no smaller than 18 points. Thirty-four years later that is still the deal, and Andrew’s name is still in the statute that set it up.

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Then the checks came due.

Property Claim Services put the insured loss at $15.5 billion. Homeowners policies carried $9.762 billion of that.³ Total damage in the United States ran near $25 billion, which made Andrew the most expensive natural disaster in American history at the time.¹ Run those 1992 dollars through the Bureau of Labor Statistics consumer price index for all urban consumers, from 140.9 in August 1992 to 333.952 in June 2026, and the insured loss is about $36.7 billion and the total damage about $59 billion in current money.⁵

Companies failed. The published counts do not agree. Eugene LeComte and Karen Gahagan, writing in the 1998 National Academies volume Paying the Price, record nine property and casualty insurers insolvent as a direct result of Andrew, with a tenth failing later under guaranty-fund assessments.³ The Insurance Information Institute’s twentieth-anniversary paper counts eight, seven of them domiciled in Florida and one from out of state, and notes that others were technically insolvent and were kept upright by transfers from parent companies.⁴

The survivors moved to leave. Florida rationed the exit. The Insurance Information Institute describes a special legislative session in May 1993 that imposed a six-month freeze on the steps insurers were taking to shed risk, followed by a three-year rule capping nonrenewals aimed at hurricane exposure at 5 percent of a company’s property book in any 12 months.⁴ LeComte and Gahagan date the three-year moratorium from November 14, 1993 to November 14, 1996 and put the cap at 10 percent of an insurer’s homeowners policies in any one county in a year.³ The two accounts differ on the arithmetic. They agree on the direction.

The state also built somewhere for the orphaned policies to go. The December 1992 special session created the Residential Property and Casualty Joint Underwriting Association to write what the voluntary market would not.³ In 2002 it merged with the Florida Windstorm Underwriting Association to become Citizens Property Insurance Corporation.⁴

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The statute still names the storm.

In November 1993 the legislature came back for another special session and passed chapter 93-409, Laws of Florida, creating the Florida Hurricane Catastrophe Fund.¹¹ Open the findings that begin section 215.555 in the 2025 Florida Statutes and Andrew is there by name, twice.

Exhibit. Florida Statutes s. 215.555(1)(b) and (1)(d), 2025

As a result of unprecedented levels of catastrophic insured losses in recent years, and especially as a result of Hurricane Andrew, numerous insurers have determined that in order to protect their solvency, it is necessary for them to reduce their exposure to hurricane losses.

The insolvencies and financial impairments resulting from Hurricane Andrew demonstrate that many property insurers are unable or unwilling to maintain reserves, surplus, and reinsurance sufficient to enable the insurers to pay all claims in full in the event of a catastrophe.

Paragraph (g) of the same findings puts Andrew’s insured and uninsured losses “in excess of $20 billion” and warns that a future wind catastrophe could run past $60 billion.⁶ That $20 billion, adjusted the same way, is about $47 billion now.

The fund is not a monument. Every admitted insurer writing residential property with wind coverage in Florida has to buy reimbursement from it, and the statute authorizes $17 billion of mandatory layer coverage, reimbursing 45, 75 or 90 percent of a carrier’s covered losses above its own retention, plus 10 percent for loss adjustment expenses.¹¹ Its February 2026 report to the legislature puts the estimated fund balance at $9.66 billion as of December 31, 2025, after reserving or paying $17.40 billion of losses, and projects total available liquid resources of about $13.51 billion for the 2026-2027 contract year.¹²

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The part that shows up on the bill.

The National Association of Insurance Commissioners dates the clause to the storm. Hurricane and named-storm deductibles, it says, were “first introduced in 1992 following the significant damages caused by Hurricane Andrew in South Florida.”⁹ As of 2 June 2025 the NAIC counted nineteen states and the District of Columbia carrying some form of it: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas and Virginia. The percentage runs from 1 percent to as high as 15 percent of a home’s insured value.¹⁰

Florida wrote its own version into law. Section 627.701(3)(a) requires an insurer, before issuing a personal lines residential policy, to offer hurricane deductibles “equal to $500, 2 percent, 5 percent, and 10 percent of the policy dwelling limits.” Past $250,000 of dwelling limit the $500 option disappears. Between $1 million and $3 million the insurer may offer 3 percent instead of the 2 percent. At $3 million and above the 2 percent option goes too. The same subsection grandfathers any deductible program lawfully in effect on 14 June 1995, which fixes how early the practice was already running in the state.⁷

A flat deductible sits still. A percentage one climbs with the dwelling limit. On a dwelling limit of $400,000, the 5 percent option is $20,000 before the insurer owes a dollar, and the 10 percent option is $40,000. Section 627.701(4)(b) makes the insurer compute that figure and print it on the declarations page at issue and again at renewal. Section 627.701(4)(a) requires this line on the face of the policy, in boldfaced type no smaller than 18 points.⁷

THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.

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The clock belongs to the whole state.

Which storm counts is also a question of statute. Section 627.4025(2)(c) says a hurricane, for Florida policy purposes, begins “at the time a hurricane warning is issued for any part of Florida by the National Hurricane Center of the National Weather Service” and ends “72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida.” Any part. A warning posted for the Panhandle starts the clock in Key West.⁸

The rest of the machinery came after the 2004 and 2005 seasons taught Florida what several storms in one summer do. For personal lines residential policies issued or renewed on or after 1 May 2005, the hurricane deductible applies on a calendar-year basis across every policy from the same insurer or insurer group, rather than once per storm. If a second hurricane lands in the same year, the deductible is the greater of what is left of the hurricane deductible or the deductible for other perils. Insurers may require policyholders to report hurricane losses that fall under the deductible, or to keep receipts, so those losses can be counted toward a later claim. And when a policyholder who has had a hurricane loss is offered a lower deductible, the insurer has to say in writing that the lower number does not apply until January 1 of the following year.⁷

Florida caps the hurricane deductible at 10 percent of dwelling limits on a home valued under $500,000. A homeowner who wants a higher one has to clear two doors. If the house carries a mortgage, the lender must approve the choice in writing. And under section 627.701(4)(d)1.a. the policyholder has to personally write or type out one sentence, and sign it, and every other named insured has to sign it too.⁷

I do not want the insurance on my home to pay for the first (specify dollar value) of damage from hurricanes. I will pay those costs. My insurance will not.

Until 2022 it had to be handwritten.¹¹