Reinsurance


Please call  Lee from Calles Financial and Chaisteli Insurance  at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer.

Here are the ones still in question. The bad ones. Will they be bought out or go out of business by the State Mandate next week. With Hurricane season coming and all the Covid 19 stuff happening, please don’t wait.

The companies that are still in discussions and will either be affirmed or downgraded, as of March 26, include: Avatar Property & Casualty Insurance Co., Centauri Specialty Insurance Co., Cypress Property & Casualty, Omega Insurance Co., Safepoint Insurance Co., Tower Hill Select Insurance Co., and Tower Hill Signature Insurance Co

Please enjoy the full article below;

https://www.insurancejournal.com/news/southeast/2020/03/27/562512.htm

Please call  Lee from Calles Financial at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer.

Lighthouse Property Insurance Corp. plans to acquire its sister carrier, Prepared Insurance Company (Prepared), from Prepared Holdings Group.

Lighthouse is a Louisiana-domiciled property and casualty insurance carrier authorized to write policies in Louisiana, Texas, North Carolina and South Carolina. Prepared is a Florida-domiciled property and casualty insurance carrier authorized to write in Florida and Louisiana. The acquisition and merger are subject to regulatory review and approval.

Please enjoy the full article below.

https://www.insurancejournal.com/news/southeast/2020/03/16/561139.htm

Please call  Lee from Calles Financial at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer.

Any rating lower than A w/Demotech means they cannot do business in Florida. Many Carriers have already been sold, but so many have issues and now rates will increase more w/ availability of coverage less likely as well. With all of this going on Tallahassee still has no bill to handle this crisis!!!!

Ratings agency Demotech is currently reviewing the 2019 fourth quarter earnings and year-end financials of the Florida insurers it rates after indicating in January that several Florida domestic insurers could receive rating downgrades. Demotech President Joseph L. Petrelli provided the following comments on the current state of Florida’s residential property insurance market in response to a request for an update from Insurance Journal.

Although it is premature to provide Insurance Journal with details on Demotech’s assignment of Financial Stability Ratings (FSRs) based upon our review and interpretation of year-end 2019 financial statements, our perspective on the current state of the residential property insurance market in Florida will materially impact our interpretation of the year-end 2019 operating results of the more than forty Florida-focused carriers that we review and analyze on at least a quarterly basis. We provide some thoughts on that aspect of your request, for your consideration

As we see the situation, market forces as well as carrier specific financial metrics have created an environment that results in the Island named Florida. Insurers have been impacted by:

  • Insurer investor capital exiting rather than entering Florida
  • Current holding company debt, infused to support growth, permit the strengthening of loss and loss adjustment expense reserves without a diminution of surplus, or otherwise support the implementation of business models, are at burdensome levels given the natural disasters of 2016 through 2019, and the impact on both annual profitability and balance sheets.
  • The cost of catastrophe reinsurance has been, and will be in the future, a financial shock to the income statements of carriers.
  • The cost of reinsurance, i.e., dollar amount of cessions, impacts the net dollars carriers retain to honor or defend the meritorious claims of their policyholders, and operating expenses, etc.
  • Although carriers can “true up” reinsurance costs by making the necessary filings with the State of Florida Office of Insurance Regulation, the financial impact of paying higher reinsurance costs is short-term and the financial benefit of “true up” accrues over a longer term. The mismatch in timing adversely impacts carriers, given the other conditions.
  • Over the past few years, the cumulative impact of rate revisions at a percentage change that eliminates the time and expense of a hearing, i.e., less than 15%, has had cumulate impact on carrier rate adequacy, and their concomitant ability to withstand current conditions.
  • In an operating environment characterized by frequent disruption of claims procedures, such as the AOB decision, Sebo, Johnson, Joyce, and other decisions revised the claim settlement landscape and set insurers and the actuaries they depend upon on their heels.
  • Over the past several years, the revised rules of engagement on claims settlement, set by the judiciary, have had their impact magnified by the natural disasters of 2016 through 2019 by increasing the number of claims subject to the revised rules of engagement.
  • The Rapid Cash Build-up program that favorably impacts the financial stability of the Florida Hurricane Catastrophe Fund (FHCF) adversely impacts the financial stability of the fine insurers that FHCF reinsurers.

Although Florida’s 2019 legislative session made progress to reverse the trajectory of claims associated with assignment of benefits, the 2020 session has seen several bills stall:

Please call  Lee from Calles Financial at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer.

Auto and home insurer Windhaven Insurance has alerted its agents and employees in Florida that it is winding down the insurance operations of its entities, including Windhaven National Insurance Co., ClutchAnalytics and The Hearth Group, and that its assets are being foreclosed on by a lender intending to sell them.

Additionally, Windhaven National Insurance Co., a Texas-based private passenger auto insurer, is being placed into receivership by the Texas Department of Insurance.

These moves come less than two months after Florida officials placed the group’s non-standard auto insurer, Windhaven Insurance Co. (WIC), into receivership and began to liquidate that company.

Please enjoy the full article below;

https://www.insurancejournal.com/news/southeast/2020/02/27/559625.htm

Please call  Lee from Calles Financial at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer.

Not just Insurance carriers, but Reinsurance rates as well unless Tallahassee comes up with the Cat Fund solution I posted before the end of the regular session. There may also be a special Insurance session after!

It’s no surprise that Florida carriers are raising homeowners’ insurance rates given several years of catastrophes and losses from litigation related to assignment of benefits and water damage claims.

What may be surprising for insureds, however, is how substantial the increases to their premiums may be, particularly if current filings being evaluated by the Florida Office of Insurance Regulation are approved without modification

In rate hearings before OIR over the last two months, several Florida carriers explained their filings for rate increases ranging from more than 20% to nearly 40%. Since December, Edison Insurance Co., Capitol Preferred Insurance Co., and Velocity Risk Underwriters (on behalf of National Specialty Insurance Co.), have told regulators that these rate increases are needed for their companies to remain healthy.

“Unfortunately, times come that you have to do certain things to increase your rates and make sure your company stays viable and functional and healthy,” said Capitol Preferred President and CEO Jimmy Graganella at its Feb. 7 rate hearing. His company is seeking a 36.5% rate increase on one of its 14 insurance programs covering about 28,000 consumers in Florida.

Capitol Preferred is one of many insurers responding to deteriorating conditions in the Florida homeowners insurance market from a combination of AOB, water damage loss claims and several years of major hurricanes, as well as a what insurers call “loss creep” from those claims in recent months.

According to a June 2019 AM Best report, several carriers, including the top five publicly traded Florida insurers (United Insurance, FedNat, Heritage, Universal and Homeowners Choice) have reported adverse development related to Hurricane Irma, “considerably increasing ultimate loss estimates since impact,” Best said.

The report also noted claims from Hurricane Michael appear to be taking a “similar, though less severe, trajectory,” with several carriers increasing ultimate loss estimates as time passes.

These factors are being blamed for the need for higher insurance rates and a tightening of coverage in several regions of the state, particularly in South Florida.

Please enjoy the full article below!

https://www.insurancejournal.com/news/southeast/2020/02/25/559166.htm

 

Please call  Lee from Calles Financial at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer

Although the 2019 hurricane season did not have a significant impact on Florida, loss creep from prior storms continues to weigh on reinsurers, leading to a likely rise in rates for the upcoming June renewal period. As noted in AM Best’s The Florida Market: Bracing for the Next Big Event (June 28, 2019), the reinsurance market for Florida property underwriters saw an initial round of hardening during the June 2019 renewal season.

The reported loss creep has in part been influenced by social inflation in the Florida market, resulting in adverse development of prior year loss reserves stemming from an increase in loss frequency and severity. Despite the lack of hurricanes making landfall last fall, companies—particularly the smaller, Florida-dominant property writers with questionable balance sheet strength—remain more susceptible to prevailing market conditions, such as hardening reinsurance pricing and adverse claims trends. Based on market surveillance, reinsurance rates are likely to increase by 15%-20% for the June renewal period; companies that depend highly on reinsurance may be most impacted

Because of inherent hurricane risk, Florida property writers spend a considerable amount on reinsurance, given the need for prudent catastrophe reinsurance programs. As we stated in our June 2019 report, a number of challenging issues in Florida have made it necessary for carriers to remain nimble in strategy and proactively manage several forms of risk, with rising reinsurance costs potentially being the next event on the horizon. Rising reinsurance costs have the potential to pressure some of the more thinly capitalized Florida-specific companies in the market.

Exhibit1 lists the companies that have a direct Florida property book of at least $1 million, for which the Florida book constitutes at least 50% of the carrier’s total book, and unaffiliated ceded premium written constitutes at least 50% of gross premium written. (Unaffiliated ceded premium provides a better picture of private market participation.)

Reinsurance dependence, as measured by unaffiliated ceded written premium to policyholder’s surplus, exceeds 100% for all but four of the 25 companies listed, indicating elevated sensitivity to the changing reinsurance environment.

Companies with high reinsurance dependence face difficult choices. Higher reinsurance rates may pressure earnings if insurers decide to continue writing business at existing levels. Those opting to retain more business may see declines in capitalization in the event of catastrophic storms; these companies may be forced to write less business to maintain existing capital.

Please call  Lee from Calles Financial at 954-270-7966, Your Insurance Consultant  about Home Insurance, Auto, Flood, Private Flood, Car, Life Insurance & Financial Products, Business  & Commercial Policies, and Group Products for business owners to give Employees benefits at no cost to the employer

This will still be a band aid and could be a huge problem if the big storm actually hits Florida, but, we need the help now for rate relief!

Floridians currently pay the highest homeowner’s insurance rates in the nation, and no one should be surprised by this. Florida is a long relatively narrow large peninsula jutting out into bodies of warm water prone to tropical storms and hurricanes.

At the same time, we also have the most robust and competitive homeowner’s market of any state by far. This fierce competition keeps rates lower than they might be otherwise. As a consumer advocate, I have never been shy about stating that good market conditions create competition and innovation which benefits insurance consumers.

The last four years have not been good for the Florida homeowner’s insurance market. The impact is that the average policyholder will pay about $500 more per year to insure their homes—an average 25% rate increase on the median $2,000 a year policy.

What caused this? In the last four years, we have not only had several hurricanes after a 10-year respite, but also in each year we have had expensive non-hurricane events that have deteriorated insurance profits and claims reserves. Because of this, private reinsurance prices (this cost is about 40% of total premium collected) have sharply increased, and investment capital has dried up—tripling the cost of borrowing.

This situation is nothing new. Florida will always have good and bad cycles when it comes to the weather and insurance.

The good news is that elected representatives in Tallahassee have mechanisms that were put in place by their predecessors to mitigate the damage that would be caused by cyclical rate increases.

Legislative reforms during the current session could reduce this average rate increase by at least half, and could include:

  1. Repeal the rapid cash build-up factor for the Florida Hurricane Catastrophe Fund (FHCF). The Florida “Cat Fund” was designed to promote stability in the international reinsurance market. Years ago when the FHCF was depleted after eight hurricanes in two years, a 25% surcharge was placed on the price of reinsurance purchased through the fund to replenish cash in the fund so that it would have enough money to pay claims for a future rainy day. Today the FHCF has $13 billion of cash on hand to pay claims and will collect over $1 billion more this year. The total $14 billion is equal to all the claims paid by the FHCF in the 26 years since it was created. Repeal of this rainy-day surcharge would pass about $350 million back to insurance consumers and reduce the average rate increase by 20%.
  2. Allow the Cat Fund to offer an additional $4 billion in coverage through a temporary layer of reinsurance that would offer about $600 million in savings that again would be passed on to insurance consumers. Companies would be able to buy more reinsurance from the FHCF instead of the private market. This would also increase capacity and lower private reinsurance costs. This reform would reduce the average rate increase by another 40%.
  3. An additional and temporary measure that the legislature could take is to provide short-term loans that would replace existing debt. According to the rating agency Demotech, this reform (which has been employed by the legislature in the past) would allow at least six Florida-based carriers to provide their policyholders with lower rates. It would also help keep this market robust and competitive.
  4. We simply cannot ignore these expected rate increases. The Florida Legislature should use the existing policy levers to get in front of the problem.

Next Page »