With reinsurance rates expected to continue rising in Florida at the mid-year renewals and those gains will be on top of the pricing improvements see a year earlier, Everest Re’s Group COO and Head of Reinsurance Jim Williamson has explained that the economics of business written will be “outstanding” at June 1st.
Williamson’s comments highlight one of the factors that could drive a very competitive reinsurance renewal environment at June 1st, as Florida programs renew and reinsurance capital providers look to allocate to their preferred layers.
With terms and conditions also greatly improved and likely to improve again, it’s a rate-on-rate and term-on-term renewal that is approaching, making the reinsurance business in Florida far more attractive for those with the appetite to deploy capacity to insurers operating in the state.
Asked during Everest Re’s recent earnings call about Florida insurance market dynamics and the expected impact that legislative reforms will have, Williamson said, “Our view on the reform that has occurred is, it’s incredibly constructive. I think the fact that the government in Florida was able to get such a broad-based reform passed is just excellent work and we think over time that’ll be incredibly healthy for the Florida insurance market, and will provide much-needed relief for homeowners there.
“At the same time, we think it’s going to take time for the effects of that reform to prove itself. We don’t expect the plaintiff bar to sit idly by while the reforms are implemented, and I think it remains a little bit to be seen on exactly what that will mean, so we’re being very cautious on that.”
While that caution means Everest Re is unlikely to go all-out to maximise growth at the Florida reinsurance renewals in June, the company doesn’t appear likely to reduce its appetite for risk in the state at all.
Williamson explained, “We have been a very consistent provider of capacity to the Florida market, and our expectations, is that will continue.
“In our view, on pricing, terms and conditions in Florida for 6/1, we expect modeled returns to exceed what we saw in Jan 1. So we think 6/1 will be better than Jan 1.
“The headline rate increases may not be as large because we already took significant rate in 2022, but the economics of those programs should be outstanding.
“So, our view is, as long as that is, proven to be true, we’ll continue to deploy a similar level of capacity to that market that we did in prior year.”
Williamson’s comments highlight an excellent point, that the year-on-year improvements seen in Florida reinsurance pricing and terms make the economics a significant improvement on prior years.
This could drive more competition we’d imagine, especially for those sought after higher-layers, which may ultimately benefit buyers of protection, through driving more price competition as well.
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