Best’s News & Research Service - May 02, 2022 10:21 AM (EDT)
Best’s Commentary: Troubled Florida Property Market Participants Under Immense Pressure
- May 02, 2022 10:21 AM (EDT)
Oldwick //BestWire// - Elevated reinsurance costs, coupled with higher loss and litigation costs, have challenged Florida property insurers’ surplus levels and hindered balance sheet strength, leading many to rethink risk appetites, according to a new AM Best commentary.
The Best’s Commentary, titled, “Troubled Florida Property Market Participants Under Immense Pressure,” notes that insurers’ ability to purchase the same level of reinsurance protection as in years past has been limited, and as a result, entities have refined risk accumulations and targeted non-renewals to minimize their reinsurance needs. Although these exposure initiatives are intended to improve overall enterprise risk management, the efficacy and appropriateness of risk mitigation strategies are yet to be fully determined. Nonetheless, “Florida property insurers may find full placement of their catastrophe reinsurance programs ahead of the upcoming renewal season a challenge,” said Chris Draghi, associate director, AM Best.
Insurance industry leaders in Florida have been warning that the current environment for those still offering personal property coverage is untenable, given the greater frequency of secondary perils (e.g., severe thunderstorms, wind and hail), higher reinsurance pricing, escalating litigation costs and building codes/laws that have been flouted by parties looking to profit. Despite rate increases, underwriting adjustments and the targeted non-renewals, rate adequacy continues to challenge some carriers.
Companies are struggling to stay afloat, and in recent years, the market has seen some failures of Florida-domiciled personal property companies, with other participants ordered into receivership. Florida’s 2022 legislative session ended without passage of major property insurance reform, but Governor Ron DeSantis will convene a special legislative session focused on property insurance reform in May. Absent significant change, companies will continue to face numerous challenges.
To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=319576 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.