The Florida insurance and reinsurance marketplace remains dysfunctional according to Swiss Re CFO John Dacey, who said that the reinsurance giant remains underweight in the state, despite some signs improvement could be on the horizon.
Dacey said that the legislative reforms that have been enacted in Florida look to be “directionally correct”, but it’s too early for Swiss Re to regain the confidence there to deploy more capital.
As we reported, at the reinsurance renewals this year, Swiss Re actually reported that first-half renewal premium volumes fell by -6% across the Americas.
While Swiss Re has been growing steadily globally, the US deployments of balance-sheet capacity to catastrophe exposed regions have not increased and in some cases have declined, Florida being one example.
Swiss Re did take a larger chunk of the Florida Citizens renewal this year, but that is perhaps only in-line with the growth of that program, rather than any increased appetite for risk in the state.
Speaking during the recent Swiss Re H1 2023 earnings call, Dacey acknowledged, “We remain underweight in Florida.
“Prices have increased in part due to a direct response to the losses in 2022 from hurricane Ian. There’s also been some legislative changes which we think are directionally correct.
“Whether they’re going to be effective, in reducing some of the excessive loss-costs that were the result of for example, homeowners being able to pass on entire claims to the legal industry which then fought for them after paying off the homeowner some fixed amount for the right to argue the claim further, and will work or not is to be seen.”
He went on to say that, “Our overall view is, this market still is not functioning as it probably should economically.”
Further explaining that, “We need continued adjustments, both in the structure of the market but also in the ultimate pricing, for us to be more comfortable to have a market-weight.
“So we’re present. We’ve worked with a number of clients that are there. But we remain cautious in the state.”