In an exclusive interview with Artemis, Joseph Petrelli, President and Co-Founder of rating agency and consultant Demotech, Inc. explained that the special session reforms passed by the Florida legislature last week are “inadequate”, when measured against what the state really needs to fix its property insurance marketplace.
Petrelli told us recently that, Florida’s insurance carriers face one problem above all others, the fact that they are over-litigated and being badly affected by a litigious property insurance claims environment where fraud has been de rigueur.
Now, after the Florida Senate and House floors passed a package of reforms in record time during the special session and the resulting Bill, SB 2B was signed into law by the state’s Governor last week, Petrelli exclusively told us that this doesn’t go far enough.
Recall, Petrelli’s firm Demotech is the rating agency for the majority of the Florida primary property insurance marketplace and assess their financial strength and reinsurance program adequacy just prior to the wind-season getting underway.
As a result, Demotech has been watching this closely as before the legislation was set, the rating agency was anticipating numerous insurance carriers struggling to retain their ratings this year, as poor performance in recent history and a struggle to secure adequate reinsurance was going to affect their financial assessments.
Now, the new legislation may have some positive effects for some carriers, but it far from the package of reforms Petrelli had been hoping Florida’s lawmakers would put together in the last week.
“When evaluating the legislation that was passed during Florida’s special session on property insurance, its favorable reviews are based upon comparison to current legislation and statutes.
“As the current legislation and statutes created, facilitated or otherwise sustained Florida’s litigation and claim frequency crisis, Demotech believes that the necessary comparison is a comparison of the legislation emerging from the special session to the legislation needed to resolve the litigation and claim frequency crisis and return Florida’s residential property insurance marketplace to a position consistent with the national composite,” Petrelli explained.
On which basis he added, “When measured against our more rational standard, the legislation that emerged is inadequate.”
Petrelli’s view is also held by many of our reinsurance market contacts, who lack confidence that the special session reforms will make a significant impact very quickly, with many feeling they will need to be followed up by additional packages of reforms.
But with Florida’s next Senate session due in May 2023, just before the key renewals again, it might be challenging for the market to wait that long, with uncertainty lingering over it and no clear signs of the reforms taking effect being felt.
It feels like the lawmakers need to consider doing more and relatively quickly as well, to satisfy those that keep the Florida property insurance market functioning, to a degree, constituents like Demotech, global reinsurance firms and the capital markets, for all of whom it seems confidence in Florida’s insurance market is sorely dented.
Read our coverage of Florida’s property insurance crisis below:
Florida insurance reforms signed into law, uncertainty to persist.
Reforms won’t have immediate positive impact on reinsurance in Florida: Survey.
Florida property reforms pass House, but reinsurers to remain sceptical.
Florida insurance reforms pass Senate, but may not save all carriers.
Florida’s insurance carriers over-litigated, not under-capitalized: Demotech’s Petrelli.
Florida insurance bills pass first hurdle. But details to matter.
Florida: Some carriers are on life support, others about to pull the plug.
Florida’s special session property insurance reforms: Opportunity lost?
Florida Citizens CFO says risk transfer markets in “disarray”.
“Really significant” property insurance reforms for Florida: DeSantis.
Florida “flash point” as reinsurance market begins to throw in the towel: ALIRT.
FedNat details Florida downsizing plan, says Monarch to be acquired.
Florida Special Session to focus on fraud, AOB abuse & affordability: CFO Patronis.
More insurers seeking rate hikes of 23% to 49% in Florida.
Cat Fund reform is crumbs, Floridians need a feast: Demotech’s Petrelli.
Florida litigated claims rise again, but “hope” in Special Session: CaseGlide.
Florida – “The theatre is on fire,” FHCF change won’t solve it: RenRe CEO.
Swiss Re not optimistic on Florida reinsurance pricing: CFO Dacey.
To ensure progress in Florida reinsurers could pull capacity: Assured Research.
Full placement of Florida reinsurance programs to be challenging: AM Best.
Florida Governor sets property insurance special session for end of May.
“Cause for concern” as AOB & litigated claims rise in Florida: CaseGlide CEO.
Ida insolvencies continue, as Florida runs out of road: ALIRT.
Florida property insurance market “in collapse”, special session uncertain.
Florida renewal “one of the toughest in recent memory” – JMP Securities.
Demotech calls for Florida market reform with rating downgrades likely.
No quick fix as Florida property insurance reforms fail to pass.
Another one bites the dust – Florida’s insurance failures continue.
Assignment of benefit (AOB) claims rising for Florida P&C insurers.
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