Hurricane Ian has left much of southwest Florida a disaster zone, and the storm is on track to mess with one of the most volatile insurance markets in the country.

Ian made landfall near Florida’s Punta Gorda on Wednesday afternoon as a category 4 hurricane, bringing huge storm surges and high winds. It has since degraded to a tropical storm, but despite the lower intensity, it is still predicted to flood parts of Central Florida, according to the National Hurricane Center. 

It’s the first hurricane of this intensity to hit the state since Hurricane Michael back in 2018, according to Axios. There are already signs of widespread damage to personal and commercial property. Videos posted on social media show destroyed homes and cars underwater.

A recent estimate from Corelogic, a property data provider, found that over a million homes in Florida’s Gulf could be at risk from Ian. The state’s insurance industry could lose anywhere from $20 billion to $40 billion from the damages, according to insurance analyst Artemis.

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The Florida insurance industry was already in a bad place before this storm. Several private insurance companies shut down this year, and more than 12 have closed since 2020, Quartz reported. This has pushed property owners to the state-owned insurer, Citizens, as their last repost, NBC News reported. The average premium in the state is now over $4,000, compared to the U.S. average of $1,544. 30 insurance companies in Florida are on a state regulator’s watch list because of their shaky finances. Depending on the severity of property damage from the storm, it could be harder for people to collect on their insurance claims, according to NBC News.

Denise Rappmund, a senior analyst and vice president in Moody’s Public Project, explained that some of the property insurance challenges in Florida come from state laws. The state has seen a lot of roofing scams and a large amount of fraudulent damage claims, reports NBC News.

“There are two primary reasons, one of which is the environmental risk exposure,” Rappmund told Earther. “But another one is the legal business environment… for all litigated property insurance claims nationally, Florida accounts for three-quarters of those.”

Because the state insurer has taken on hundreds of thousands of customers in the last two years, extreme weather would make it harder to pay out to everyone. Some customers may not receive adequate coverage for the type of damage that has been caused by the storm. Most private and state insurance primarily cover wind damage, according to the Orlando Sentinel. And though the storm has caused wind damage, many homes have also been flooded.

Florida officials have tried to curb the effects of the unstable insurance industry. In May, Governor Ron DeSantis signed a property insurance reform bill that set aside $2 billion into reinsurance relief and $150 million for a hurricane retrofitting grant. The bill prohibited insurance companies from denying property owners coverage based on the age of the property’s roof. Under the new bill, insurance companies must also explain why they denied a claim.

Rappmund predicts that state officials may have to become increasingly involved in regulating the insurance market, especially after Ian. She noted that some of the issues in Florida could eventually spread to other parts of the U.S.

“Everyone’s talking about Florida right now. And they’re the precipice of something major, unfortunately, but I think that’s sort of a common theme across the country,” she said, “We have massive flooding in the Midwest, major forest fires in the West. The question of insurability is something that is really front and center on my mind, not just in Florida.”