Just when parts of the property-casualty industry thought it was safe to re-enter the Florida market, Hurricane Idalia made landfall closer to the heavily populated Tallahassee area than expected and brought heavy storm surge to the Big Bend coastline.

Idalia made landfall as a Category 3 storm about 8 a.m. Eastern time Wednesday, with the eye of the storm near Keaton Beach, about 75 miles southeast of Tallahassee. Even if the strongest winds do not make a direct hit on the state capital, residents there feared that Tallahassee’s famous tree-lined streets will mean downed limbs, widespread roof damage and power outages.

“Tallahassee has so many trees, we’re bound to get some damage,” said David McKee, owner of the McKee Insurance Agency, which also has policyholders all across the most vulnerable parts of the low-lying coastal areas along Apalachee Bay, southeast of Tallahassee.

A CNN meteorologist warned that thousands of trees could fall, from north Florida across southeast Georgia. NBC News reported that a motorist in Pasco County, near Tampa, was killed in a weather-related accident. Businesses in downtown Tarpon Springs saw at least two feet of storm surge, Bloomberg News reported.

Another major loss for Florida’s insurers would come at a crucial moment for the industry – less than a year after Hurricane Ian caused $60 billion in insured losses and after 10 insurer insolvencies in the last 30 months. But the storm also comes just as state legislative reforms appear to be having a desired effect on litigation and loss adjustment expenses. Four new P/C carriers have been approved to do business in Florida in the last two months, providing a ray of sunshine for the state.

At least one industry veteran believes the revamped Florida market can now withstand another powerful blow.

“The legislative changes put in place since Hurricane Ian have strengthened Florida’s insurance industry and, notwithstanding the last five years of unprecedented losses, companies are in a stronger position to cope with a major storm,” said Fred Karlinsky, co-chair of the Greenberg Traurig insurance and regulatory law firm’s Global Insurance Regulatory and Transactions Practice Group.

Still, even with the legislative changes, heavy losses from Idalia will likely result in further rate increase filings by at least a few insurers in coming months. And some insurance advocates are concerned that insureds could also be hit with a surcharge later this year if Idalia forces Florida’s Citizens Property Insurance Corp. to burn through the surplus in its Personal Lines Account.

Citizens, created to be an insurer of last resort but now the largest carrier in Florida, has a large share of policies in the 10-county area that could be most affected by the storm — more than 16,000, according to first-quarter 2023 data from state regulators. The insurer now holds a surplus of just $420 million in its Personal Lines Account, one of three accounts set up by statute.

“If losses exceed the $420 million in that account, then, yes, that would result in an assessment,” said Michael Peltier, spokesman for Citizens.

An emergency assessment on Citizens policyholders could add 10 percent to premiums.

The account’s surplus is at that level due to rapid growth of policies in recent months and heavy losses from Hurricane Ian and other storm events, Peltier said.

But breaching the surplus appeared to be less than likely as of Wednesday morning. A look at Hurricane Ian gives a rough idea of claims and costs that Citizens could see from Idalia:

Ian, which struck the Fort Myers area in late September 2022, resulted in 68,000 claims by Citizens policyholders and caused an estimated $3.8 billion in losses, including litigation and loss adjustment expenses. The average Ian Citizens claim, with expenses, was more than $55,000. With the recent legislative reforms, the volume and cost of claims litigation is expected to drop significantly. And the area hit by Idalia holds fewer policyholders.

So, even if 10,000 Citizens claims were filed from Idalia, at an average of $30,000 each, that would be below the Personal Lines Account surplus level.

“It’s really premature to compare Idalia to Ian, and may not ever be a fair comparison,” Peltier said Tuesday.

The Florida Legislature earlier this year allowed Citizens to combine its three accounts into one, to provide more flexibility with surplus. But that move won’t be made until January.

Other insurers with policyholders in the Hurricane Idalia zone include American Bankers, with more than 6,000 tenant policies in force in the most-populous county of Leon, home to Tallahassee; Cypress Property & Casualty, with some 2,400 tenant policies in Leon County; Nationwide Mutual Insurance, with 4,200 homeowner policies in Leon County; and American Modern Insurance, with 1,200 tenant policies in the county.

Some insurers’ information is considered a trade secret and is not reported by Florida’s Office of Insurance Regulation, so some major insurers are not included in the OIR’s quarterly report.

Meanwhile, news reports from the epicenter of Idalia showed heavy storm surge, flooding and winds reaching 110 mph. The Steinhatchee River rose 7 feet in one hour, putting it above flood stage, the National Weather Service reported. The storm had reached Category 4 earlier but weakened slightly before making landfall, Bloomberg News Service reported. Tornado watches were posted for parts of the state and into Georgia.

More than 140,000 homes and businesses were without power in Florida on Wednesday, according to data from PowerOutage.us. The utility with the most outages was Duke Energy with more than 40,000 customers without power, followed by Florida Power & Light Co. at more than 16,000, Reuters news service reported.

Tampa Electric on Tuesday said about 3,000 people, including line crews, tree trimmers and damage assessors, are traveling to Florida to help restore power after the storm passes.

Top photo: Reporters wade through floodwaters in Tarpon Springs, Fla., after Hurricane Idalia passed offshore early Wednesday morning. (Joe Raedle/Getty Images North America/Bloomberg)