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Companies can be shut down or be told to non renew a large book of their business. This will be a huge problem for so many of his happens.

After reviewing the year-end financial statements of the Florida-based carriers it rates, Ohio-based ratings agency Demotech is warning that many insurers could see underwriting and operating losses in their year-end financial statements and that those insurers should be prepared to shore up and strengthen their reserves going forward.

“Florida has experienced three straight years of storms, as well as an [AOB] issue and other court issues – it’s a complex environment,” said Demotech President Joe Petrelli.

On Feb. 18, Demotech announced it had affirmed the Financial Stability Ratings (FSRs) of 51 of the 52 Florida-focused carriers it rates prior to the public release of their year-end financial statements, saying the companies had demonstrated to Demotech realistic estimates of gross and net loss and loss adjustment expense reserves related to claims arising from 2017’s Hurricane Irma and 2018’s Hurricane Michael and that their reinsurance was of “sufficient quality and quantity to expect reimbursement for outstanding losses and loss adjustment expenses…”

Despite these Florida-focused insurers having their ratings affirmed, on Feb. 28 Demotech said underwriting and operating losses should be anticipated from the year-end financial statements of many Florida carriers.

“Matthew, Irma and Michael represented a named event for each of the past three years,” the statement from Demotech said. “Operating profits proved to be elusive for many.”

Demotech further stated that going forward insurers will need to strengthen their loss and loss adjustment expense reserves to deal with the “difficult operational environment associated with assignment of benefits [AOB] and other judicial precedents that expanded insurer liability…”

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Despite these Florida-focused insurers having their ratings affirmed, on Feb. 28 Demotech said underwriting and operating losses should be anticipated from the year-end financial statements of many Florida carriers.

“Matthew, Irma and Michael represented a named event for each of the past three years,” the statement from Demotech said. “Operating profits proved to be elusive for many.”