Florida Got Lucky On Hurricanes This Year. Don’t Waste This Gift | Opinion

Florida appears to have dodged a bullet this hurricane season. Despite NOAA predicting an above-average number of storms, no major system made landfall. Home and business owners finally caught a break after several years of brutal storms. But luck like this doesn’t last.

For anyone running a business in Florida, this calm should be a signal to prepare, because the best time to make yourself more resilient isn’t after the storm. It’s right now, while the sky is still clear.

Commercial insurance costs in Florida are already incredibly high, and major carriers continue to pull out of the state. Even without a major storm, property and casualty premiums have climbed as weather volatility increases. Each season, our coverage options shrink, our deductibles go up, and the exclusions multiply. And small businesses are always hit the hardest.

Having a quiet year is a window for Florida businesses to reconsider their approach to risk management. One option that deserves far more attention is 831(b) micro-captives.

A micro-captive is a small insurance company owned by a parent company, designed to insure the risks that commercial carriers refuse to cover, or will only cover at prohibitively expensive rates. You pay premiums into it, build up tax-deferred reserves, and create a long-term safety net that belongs to you, not a traditional insurer who might decide not to renew your policy after the next Hurricane Helene.

Captive insurance isn’t new — big corporations have been using it for decades. Even small businesses have had the option since 1986, when section 831(b) of the tax code was created. A family-owned construction company, a marina, a distributor — any Florida business that faces real fortuitous risks — can form a captive to handle risk exposures that might otherwise bankrupt them.

We see it every time disaster strikes: Many small businesses will close for good, not due to the physical damage to their property, but because of all the accompanying issues. For example, being forced to wait while claims are adjudicated by a commercial insurer — the last thing small businesses need to worry about.

A micro-captive bridges the gap. It lets you set aside capital to protect yourself from storm damage, business interruption and more.

The problems facing Florida’s insurance market over the last several years are dire. Business owners really have just two choices: Keep paying more for less or start taking control of their own risk. Captives can give them that control, and this quiet year is the perfect time to start.

Making it through 2025 unscathed is a gift. Use it. Talk to your accountant, your risk advisor or someone else who knows the 831(b) space. Start working on creating the framework now, build your reserves over time, and make sure you can weather next year’s storm season with confidence.

Victor Scott Sonnier is the founder of the financial consulting firm Financial Management Services of America (FMSA), with offices in Texas, Louisiana and Delray Beach.