Florida property insurers under “immense pressure”

Elevated reinsurance costs, coupled with higher loss and litigation costs, are challenging Florida property insurers’ surplus levels and hindering balance sheet strength, leading many to rethink risk appetites, according to AM Best

The rating agency notes that insurers’ ability to purchase the same level of reinsurance protection as in years past has been limited, and as a result, entities have refined risk accumulations and targeted non-renewals to minimise their reinsurance needs.

Although these exposure initiatives are intended to improve overall enterprise risk management, the efficacy and appropriateness of risk mitigation strategies are yet to be fully determined.

Mid-year renewals loom

Nonetheless, “Florida property insurers may find full placement of their catastrophe reinsurance programs ahead of the upcoming renewal season a challenge,” said Chris Draghi, associate director, AM Best

Insurance industry leaders in Florida have been warning that the current environment for those still offering personal property coverage is untenable, given the greater frequency of secondary perils (eg severe thunderstorms, wind and hail), higher reinsurance pricing, escalating litigation costs and building codes/laws that have been flouted by parties looking to profit.

Despite rate increases, underwriting adjustments and the targeted non-renewals, rate adequacy continues to challenge some carriers.

Companies are struggling to stay afloat, and in recent years, the market has seen some failures of Florida-domiciled personal property companies, with other participants ordered into receivership.

Florida’s 2022 legislative session ended without passage of major property insurance reform, but Governor Ron DeSantis will convene a special legislative session focused on property insurance reform in May.

Absent significant change, companies will continue to face numerous challenges, concludes AM Best.