NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) today released a research report entitled, “Reinsurance Pricing and Capacity Are Rays of Sunshine for Florida Insurance Market.” The key points made in the report are:
- Excess capacity and increased pricing competition in reinsurance markets are positively impacting the market for Florida property writers, as we head into what is forecast to be an active hurricane season.
- Insurers issuing significant business in Florida have faced profitability issues due to escalating non-hurricane losses through assignment of benefits (AOB) claims.
- KBRA believes investment grade financial strength ratings are possible for insurers concentrated in the state; to that end, strong balance sheets, proactive and effective risk management, and favorable operating fundamentals are essential elements.
With the 2017 Atlantic hurricane season officially underway, many Florida property writers were the beneficiaries of lower reinsurance rates, driven by excess capacity and pricing competition. Reinsurance rates fell for the sixth consecutive year at the June 1, 2017 renewal, and KBRA notes that several Florida-focused companies have recently reported improved reinsurance pricing, terms, or structures.
Rising water-loss claims and increased litigation have dampened the financial performance of Florida writers in recent periods. Without significant reform, including possible legislative action on AOB, non-hurricane losses may threaten the financial stability of some insurers and could result in policies returning to Citizens Property Insurance Corporation.
Fortunately, for primary insurers, availability of catastrophe reinsurance is at an all-time high, and pricing is at or near its lowest point in decades. These insurers have also benefited from ongoing issuances of catastrophe bonds and the strengthening of the Florida Hurricane Catastrophe Fund as a component of their reinsurance structures.
Please click here to access the report.
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).