Florida Hurricane Catastrophe Fund

Reinsurance pricing for catastrophic events should take into account the impact that recently enacted legislative reforms in Florida will have, although right now just how much they will reduce loss and loss adjustment costs in the state remains to be seen.

Out of the more than fifty Floridian insurance carriers that are rated by Demotech, Inc. roughly two-thirds are already meeting or exceeding the raised requirement to buy first event reinsurance protection to the 1-in-130 year loss level, but 16 may need to buy more coverage.

Floridian primary insurers would be advised to check their reinsurance plans as the renewal fast approaches, after Demotech, Inc. updated its first-event reinsurance requirements to mandate that a 1-in-130 year loss event be covered.

Reinsurance and ILS markets remain optimistic on the potential for relatively significant price increases at the next Florida renewals in June, despite the fact some insurers are increasing their FHCF participation rates.

The $1 billion Florida Hurricane Catastrophe Fund (FHCF) reinsurance program renewal at June 1st came in at a cost that was roughly 4% cheaper on a net basis, despite the fact the attachment point had been lowered effectively making the program layer a riskier underwriting opportunity.

The Florida Hurricane Catastrophe Fund (FHCF) successfully renewed its $1 billion reinsurance program at June 1st 2018, with significant insurance-linked securities (ILS) fund and collateralized reinsurance vehicle participation.

The Florida Hurricane Catastrophe Fund (FHCF) is expected to target a renewal of its $1 billion layer of reinsurance coverage at the mid-year, but the attachment point of the layer is expected to drop down as the Fund arranges its financing after the impact of hurricane Irma last year.

The Florida Hurricane Catastrophe Fund (FHCF) is facing losses of up to $6 billion due to the impacts of hurricane Irma, according to actuarial estimates, with the loss being contained within the FHCF’s funding and not significant enough to trigger its reinsurance program.

The Florida Hurricane Catastrophe Fund (FHCF) reinsurance renewal has now been completed, with the State Board of Administration (SBA) securing another $1 billion layer of cover, again featuring fully collateralized participation from some ILS fund managers, and with a -4% price reduction year-on-year.

The Florida Hurricane Catastrophe Fund (FHCF) may buy reinsurance at a lower attachment point of $10.5 billion, to protect itself against losses from the 2017 tropical storm and hurricane season, as its trustees expressed a preference for moving the risk transfer down the tower compared to prior years.