- Shares of Homeowners Choice, Universal Insurance Holdings and Heritage Insurance Holdings were down by double digits.
- Reinsurers XL Group and Everest contributed some of the largest losses to the S&P 500's decline, down 4.3 and 3.7 percent respectively.
- While Irma is still a few days off the United States coast, insurers are bracing for storm surges, flooding and deadly winds.
Hurricane Irma is not expected to touch Florida for several days but its impact was already being felt in the U.S. stock market.
Stock prices of home insurers tied to Florida plunged Tuesday after Irma strengthened into a Category 5 storm. This latest storm system follows Harvey, which dumped several feet of rain, destroyed thousands of homes and killed over 50 people in a matter of days.
Shares of HCI Group, Universal Insurance Holdings, and Heritage Insurance Holdings, which provide property and casualty homeowners insurance in the Sunshine State, were down 13, 16, and 13 percent, respectively.
Collectively, insurance stocks are having their worst day of 2017. The S&P Insurance Industry (.IUX) is down 1.9 percent, on pace for its worst daily performance since Brexit lows in June 2016 when it fell 3.16 percent. The SPDR S&P Insurance ETF (KIE) is down 3 percent, also on pace for its worst daily performance since June 2016 when it fell 3.14 percent.
Its direct path is not yet clear, but Florida Gov. Rick Scott was not taking any chances, implementing a state of emergency for all 67 counties in the state on Monday.
With winds topping 175 mph, Irma on Tuesday became the strongest hurricane on record in the Atlantic basin outside of the Caribbean Sea and Gulf of Mexico, according to the National Hurricane Center.
Roberto Friedlander, head of energy trading for Seaport Global Securities, said that while the storm isn't poised to have a major impact on energy infrastructure like Harvey, the focus will be on densely populated Miami.
"There is no modern historical precedent for a Miami hurricane, because the last direct hit was back in the 1920s. A direct hit from Irma could disrupt rail and container activity, and damage infrastructure for transportation, in addition to putting thousands of lives at risk," wrote Friedlander. "Combined with rainfall, then we are looking at catastrophic flooding to a vast area that already has problems with water levels. Real estate risks are simply gigantic."
HCI Group is headquartered in Jacksonville. Universal is based in Fort Lauderdale and Heritage is in Clearwater.
Experts are already predicting that final damage assessments of Hurricane Harvey will smash previous storm totals as the most expensive natural disaster in American history. Widespread flooding caused historic water damage to houses in southeastern Texas, displacing thousands who must begin the rebuilding process.