Florida renewals a “perfect storm” of challenges, warns Demotech
20th May 2020 – Author: Matt Sheehan
Ongoing complications include jurisdictional risk, the competitive position of Citizens Property Insurance Corporation, and increases in the cost of catastrophe reinsurance, including the limited interest of those offering catastrophe reinsurance.
“Having been involved in Florida’s residential property insurance marketplace since 1996, our view is that the financial and market-based criteria affecting residential property insurance have never been more difficult to navigate,” Demotech stated.
Changes in business models and operating plans have already been announced by Capitol Preferred Insurance Company, People’s Trust Insurance Company, and Avatar Property and Casualty Insurance Company, and Demotech believes other carriers will respond in a similar manner.
“We have not experienced market conditions like we are seeing this year since 2006,” said Brian O’Neill, Partner-Client Executive at TigerRisk.
“We are a supply and demand economy, and given the shortage of retro cover available (especially low attaching cover), the loss creep from Irma and to some degree Michael, the lack of legislative reforms to fix the one way attorney fee statutes in the state, and then throw in a Global Pandemic – you have a perfect storm hitting the June 1st renewals,” he continued.
“The carriers in the state are truly performing their best to weather this storm. Support from core reinsurance partners will be critical in this environment along with creating unique risk management solutions and raising reinsurance capacity to optimally manage each carrier’s operational and financial needs.”