Driving home the seriousness of the situation in Florida’s property insurance market today, the sponsor of one of the bills being discussed at the special legislative session in Tallahassee said on the floor that some carriers in the state are “on life support.”
The bill, brought to the special session by Senator Jim Boyd, is one discussing the potential $2 billion additional reinsurance fund that we described in our article earlier today.
The reform, as well as many others set to be discussed this week as lawmakers look to enact reforms to the Florida property insurance market, targets helping insurance carriers buy sufficient reinsurance, so as to sustain their ratings and businesses, while also aiming to ultimately reduce rates for insurance consumers.
But interestingly, Boyd is cited by journalists as having said that while rate relief for consumers is a primary goal of the reforms, it’s not clear how large any savings could be.
Journalist Aaron Parseghian tweeted that the sentiment he and his team are getting from lawmakers outside the senate, is that consumers should not expect their insurance rates to go down straight away, no matter what reforms are enacted or what new laws are passed during the special session.
During the special session discussions today, perhaps the most telling comment came from Boyd himself, who said the current situation is the worst he has ever seen the insurance market in Florida.
Boyd has owned his own insurance businesses in the state for some years.
“It’s very serious,” Boyd said, adding that, “Some carriers are on life support, some are about to pull the plug, others are in critical condition,” according to journalist Zac Andersen of the Herald Tribune who was present.
Which really drives home the scale of the issues faced, as these same carriers race towards the all-important reinsurance renewals and a market where reinsurance pricing has risen significantly, while reinsurance risk appetites have fallen and capacity pulled-back.
As we explained this morning, there is significant scepticism over the range of reforms set to be discussed, whether they will have a significant impact and drive meaningful reform, or whether they will fail to stem the tide of fraudulent claims and litigation in Florida’s property insurance sector.
In addition, there is scepticism whether the reforms will do anything to improve the reinsurance and capital markets appetites for assuming risk in the state, which is really almost as important as the significant litigation reform required for the carriers.
The feeling through today in our conversations with players in and working in Florida’s insurance and reinsurance market, is that the reforms may keep the life support power on a little longer, but may not be sufficient for every stricken carrier and overall the general consensus seems to be that they won’t change the reinsurance markets view of risk significantly in the state.
Read our coverage of Florida’s property insurance crisis below: