Having visited the United Kingdom last week, one of the locations on Governor of Florida state Ron DeSantis’ agenda was an event co-hosted by Lloyd’s of London where he met with reinsurance leaders to try and press home the improved situation in the Florida property insurance marketplace.
Joining DeSantis was Citizens Property Insurance Corporation President and CEO Tim Cerio and the pair discussed the reinsurance needs of the Florida insurance market as the critical mid-year renewal season fast-approaches.
Governor DeSantis provided an update on Florida’s efforts to stabilise its property insurance market situation.
As our readers will be only too aware, Florida’s property insurance market faced a crisis caused by fraud and litigation, resulting in a wave of loss creep and both reinsurance and insurance-linked securities (ILS) market participants losing confidence in the state.
That drove reinsurance rates much higher at last year’s June 1st renewals and the expectation is that reinsurance renewals for Florida focused property towers in 2023 will face double-digit rate increases again, with some carriers expected to struggle to fill out their programs and reinsurer and ILS appetite for lower-layers of Florida risk seen as dwindling to non-existent in some cases.
But Florida has enacted a raft of policy changes and legislation designed to stem fraud and litigation, to rebuild confidence in reinsurance and capital markets for protecting its insurers, with hopes of bringing down the costs of risk transfer for them as well.
DeSantis said that at the meeting with reinsurance executives in the UK he “secured a commitment from companies in attendance to increase access for carriers serving Florida policyholders.”
“Access to affordable reinsurance options for Florida carriers is important for the stabilization and long-term growth of our property insurance market,” Governor Ron DeSantis explained. “Florida is home to one of the largest and most complex insurance markets in the world, and I was happy to provide an update about recent legislative reforms that have made the market more attractive to businesses.”
“Governor DeSantis continues to lead efforts within the legislature and throughout the insurance sector to provide for meaningful reforms to Florida’s market that promote competition and consumer choice,” added Citizens Property Insurance President and CEO Tim Cerio. “Ensuring that Florida carriers can obtain reinsurance at a reasonable price reduces the number of enrollments and renewals within the Citizens portfolio and results in a win for Florida policyholders and taxpayers alike.”
Florida’s insurance-related economic sector includes more than 4,800 businesses, writing over $209 billion premiums, DeSantis wanted to drive home, with the insurance industry accounting for more than 213,000 jobs in the state, and generating roughly 3.5% of Florida’s GDP in 2020.
So it’s an important sector and therefore important that DeSantis demonstrates he’s trying to take action to support it.
However, it’s important to note that reinsurers in the UK have always had a commitment to Florida’s insurance market and that DeSantis’ visit is unlikely to drive any additional limit to Florida, that wouldn’t already have been there anyway.
Reinsurers and ILS funds will already have their risk appetites and limits dialled in for Florida this year, so a last minute visit from the state’s Governor is unlikely to create any wave of capacity to moderate pricing there.
Finally, it’s also worth noting that DeSantis’ reception at this very meeting has been cited as underwhelming at best, with news publisher Politico reporting that industry executives in attendance taking a dim view of the Florida Governor, it seems.
So, whether any commitments received were largely for show in the throws of the meeting, or real and going to result in any tangible flows of reinsurance capital to Florida, remains to be seen.