Florida is considered ground-zero for global property catastrophe risk given its exposure to hurricanes and the significant insured values-at-risk.
As a result, the Florida market is effectively ground-zero for the catastrophe bond and insurance-linked securities (ILS) market, with a significant proportion of ILS market exposure linked to catastrophes that might occur in the state.
Florida’s property insurance marketplace is also known to have faced significant challenges, not just from losses, but with the just as real threat and impact of social inflation and litigation that have driven claims costs higher and ultimately raised insurance pricing. This has had a knock-on effect on reinsurance and ILS pricing for risks in Florida.
Data suggests that Florida domestic market property insurance companies will experience improving performance, as the effects of recent legislative reforms take hold and market conditions improve.
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Broking giant Aon is anticipating a “significant increase in demand” for property catastrophe reinsurance capacity at the upcoming mid-year renewals, with market conditions expected to continue developing favourably for buyers.
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Florida’s property insurer of last resort, Citizens Property Insurance Corporation, has said that its sees market conditions as especially positive in the capital markets, as it looks to progress its $5.5 billion reinsurance renewal for 2024.
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When it comes to challenges in the property insurance marketplace, in relation to climate, weather, catastrophe losses and insurer’s ability to underwrite property business profitably, typically California or Florida are the poster child, but analyst firm ALIRT Insurance Research believes the issue is more widespread across the United States.
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After Florida Governor Ron DeSantis claimed on television that the states Citizens Property Insurance Corporation “is not solvent”, the CEO of the insurer of last resort has responded saying that Florida Citizens financial structure means it “will always be able to pay claims”.
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Universal Insurance Holdings, a Florida headquartered insurer that is a bellwether for signals of appetite for risk and use of reinsurance for those operating in the state, is aiming to expand its business in Florida once again, with its CEO citing much better conditions after the legislative reforms.
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The legislative reforms aimed at improving the property insurance market in Florida are increasingly seen as having a positive effect, with carriers increasing their appetite for writing in the state and analysts suggesting the benefits of the reforms could be significant over time.
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Investors are expected to continue to demand a premium for providing capital to support indemnity catastrophe bonds focused on the state of Florida, as despite the reforms this market remains complex, Twelve Capital’s Head of Investment Solutions Vittorio Sangiorgio has said.
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At a meeting of the Florida House Insurance and Banking Subcommittee yesterday, Tim Cerio, the CEO of Citizens Property Insurance Corporation cautioned that the global reinsurance market may not have sufficient capacity to back lawmakers’ idea of turning the insurer of last resort into a hurricane risk pool for the state.
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Presenting to the Florida House Insurance and Banking Subcommittee yesterday, Tim Cerio, the CEO of Citizens Property Insurance Corporation, said that depopulation efforts are expected to accelerate this year, while the ultimate goal is to reduce the policycount to around 400,000.
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