Reinsurance


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A U.S. government weather forecaster said on Thursday that La Niña conditions are likely to persist through the Northern Hemisphere winter.

La Niña is characterized by unusually cold ocean temperatures in the equatorial Pacific Ocean and is linked with floods and droughts. It is the opposite phase of what is known as the El Niño Southern Oscillation (ENSO) cycle.

The National Weather Service’s Climate Prediction Center (CPC) in its monthly forecast pegged the chance of La Niña developing at about 85 to 95 percent, with a transition to ENSO-neutral expected during the spring.

“Based on the latest observations and forecast guidance, forecasters believe this weak-to-moderate La Niña is currently peaking and will eventually weaken into the spring,” the agency said.

The agency last month projected the chance of the phenomenon developing through the Northern Hemisphere winter at about 80 percent, with a transition to ENSO-neutral most likely during the mid-to-late spring.

La Niña emerged in 2016 for the first time since 2012, before fading in early 2017.

Please enjoy the full article below;

https://www.insurancejournal.com/news/national/2018/01/12/477026.htm

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Please call Lee from Acentria Insurance at 954-351-1960 or my cell at 954-270-7966 for free quotes on Home Insurance, Auto, Flood, Private Flood, Car, Business & Commercial & Life, group & Financial products as well.

The Federal Emergency Management Agency (FEMA) has completed a reinsurance placement with 28 private reinsurers to help the National Flood Insurance Program (NFIP) recover losses it may have to pay in 2018.

Expanding on its first private reinsurance placement last year of $1.042 billion, the 2018 deal calls for FEMA to transfer up to $1.46 billion of the NFIP’s financial risk to the private reinsurance market. This new reinsurance agreement is effective from January 1, 2018, to January 1, 2019.

Please enjoy the full article below;

https://www.insurancejournal.com/news/national/2018/01/08/476500.htm

Please call Lee from Acentria Insurance at 954-351-1960 or my cell at 954-270-7966 for free quotes on Home Insurance, Auto, Flood, Private Flood, Car, Business & Commercial & Life, group & Financial products as well.

Ross Hancock sold his four-bedroom house in Coral Gables, a city of pastel luxury at the edge of Miami, because he was worried that sea-level rise would eventually hurt his property’s value. He and his wife, Darlene, downsized to a small condo on Biscayne Bay, perched atop one of the highest coral ridges in the area. There, he presumed, they would be safer.

Then Hurricane Irma hit.

The September storm pushed water onshore with such force that it penetrated the seams of Hancock’s building, defeating stormproof windows and damaging a third of the units. It knocked out the elevators, ruined the generator, and flooded the parking lot. Months later the park next door remains strewn with mangled yachts hurled from from the ocean.

Hancock’s unit was spared, but he’s facing a potential $60,000 bill from the condo association for his share of what insurance won’t cover. Now, four years after leaving Coral Gables, he and his wife want to move again—this time, out of Florida. But more than two months after listing their property, they haven’t found a buyer.

“It’s not the greatest time to be showing it,” Hancock said, noting the damage to the building. Still, Irma convinced him that it doesn’t make sense to wait. “At some point, we won’t be able to sell.”

Decisions by people such as Hancock to sell their homes demonstrate that one of the great mysteries of climate change isn’t scientific but psychological: When will the growing risks associated with rising seas and more severe storms begin to affect home values in otherwise desirable coastal markets?

Nowhere is that question more pressing than South Florida, which has some of the country’s priciest properties—and some of the most vulnerable. A state built on real estate speculation, whose chief attribute was proximity to the water, now faces a whole new problem: There’s not enough land, high enough above the water, for its residents to pull back from the rising seas. By the end of the century, database company Zillow Group estimates, almost a half-million Miami homes could be—literally—underwater. That’s more than anywhere else in the country.

In a working paper posted this month on Social Science Research Network, an online repository of academic research, professors from the University of Colorado at Boulder and Pennsylvania State University found that homes exposed to sea-level rise sell at a 7 percent discount compared with equivalent but unexposed properties.

Please enjoy the full article below;

https://www.insurancejournal.com/news/southeast/2018/01/02/475789.htm

Please call Lee from Acentria Insurance at 954-351-1960 or cell at 954-270-7966 for free quotes on Home Insurance, Auto, Flood, Private Flood, Car, Business & Commercial, & life, group & Financial products as well.

Citizens Property Insurance Corp., the Florida state-run insurer of last resort, is anticipating its policyholder count will increase in 2018 for the first time since its efforts to shed policies through depopulation began several years ago.

As it moves on from a tumultuous 2017 that included a major hurricane and ongoing assignment of benefits (AOB) abuse, Citizens executives said at its board of governors meeting last week that it anticipates more than 60,000 policyholders from private insurance companies will return to the state-run insurer of last resort.

Citizens President, CEO and Executive Director Barry Gilway told the board at the Dec. 13 meeting that the Florida domestic insurance market’s combined ratio and surplus have declined, and the majority of Florida insurers experienced negative net income for the first time in five years.

While the active 2017 storm season is one factor contributing to deteriorating insurer results, the biggest factor is increasing costs from nonweather-related losses and AOB abuse fueled by attorneys and contractors. The industry has started taking steps to limit losses from AOB, with some insurers not writing in certain areas of the state where it is the rampant.

Citizens, which is statutorily obligated to offer coverage when the private market will not, will have to pick up these policies. Gilway said he expects Citizens will see significantly less depopulation next year.

“When the market is healthy, and companies are making money, depopulation soars; when it becomes negative, depopulation drops. We are not expecting a lot of depopulation next year,” Gilway said.

Instead, Gilway said, Citizens is expecting its overall policy count of 442,000 – the lowest it has been since the company was formed in 2002 – to climb back up to around 500,000. Citizens policy count reached a high of 1.4 million before the depopulation program began in 2012.

Please read the full article below;

https://www.insurancejournal.com/news/southeast/2017/12/20/474844.htm

Please call Lee from Acentria Insurance at 954-351-1960 or  954-270-7966  for free quotes on Home Insurance, Auto, Flood, Private Flood, Car, Business & Commercial policies and Life & Financial products as well.

The Federal Emergency Management Agency (FEMA) is seeking to recover the full $1.042 billion of its reinsurance coverage to help pay the federal flood insurance program’s losses from Hurricane Harvey. Those paid losses exceeded the minimum threshold for the NFIP’s reinsurance coverage.

Earlier this year, the National Flood Insurance Program (NFIP) transferred $1.042 billion of the NFIP’s financial risk to the private reinsurance markets, marking a key step towards a stronger and more resilient program.

In January 2017, FEMA executed the 2017 reinsurance agreement with 25 reinsurance markets representing some of the largest insurance and reinsurance groups around the globe. The 2017 placement of reinsurance will cover a portion of NFIP losses above $4 billion arising from Hurricane Harvey, saving taxpayers almost $1 billion.

Under the 2017 reinsurance agreement, reinsurers agreed to indemnify FEMA for flood claims on an occurrence basis. It is structured to cover 26 percent of losses between $4 billion and $8 billion, up to a maximum of $1.042 billion. FEMA paid a total premium of $150 million for the coverage.

On November 6, 2017, FEMA surpassed $4 billion in paid claims to insured flood survivors of Hurricane Harvey, triggering the NFIP reinsurance placement. While FEMA is working diligently to understand the full extent of losses to the 2017 NFIP, loss estimates range between $8.5 billion and $9.5 billion, which would mean that FEMA will recover the entire $1.042 billion in reinsurance. FEMA sent initial bills to reinsurers today.

Thus far, the trifecta of Hurricanes Harvey, Irma and Maria generated more than 120,000 NFIP claims, marking the second largest claims year in NFIP history. NFIP said it has paid over $6.687 billion in claims so far, with processing ongoing.

FEMA’s 2017 reinsurance placement was part of a strategy promoting private sector participation in flood-risk management. FEMA is in the process of securing a new reinsurance placement for 2018.

Please enjoy the full article below;

https://www.insurancejournal.com/news/national/2017/12/06/473261.htm

Please call Lee from Acentria Insurance at 954-351-1960 or 954-270-7966 for free quotes on Home Insurance, Auto, Flood, Private Flood, Car, Business & Commercial, & Life & Financial products as well.

An estimated 23 percent of residential and commercial properties in the U.S. are at high or moderate risk of flooding but are outside of designated Special Flood Hazard Areas (SFHA) as identified by the Federal Emergency Management Agency (FEMA), according to data analysis from CoreLogic.

Property owners living within SFHA zones must have flood insurance if there is a federally insured mortgage, while those living outside SFHA zones are not required to have flood insurance. Many property owners choose not to carry flood insurance if it is not required even though their property may still be at risk of flood.

Nationally, more than 29 million properties (29,437,151), or 23 percent, are outside a designated SFHA despite being at what CoreLogic rates as high or moderate risk of flooding. At the state level:

  • Florida has the highest number of properties in this category at 5,055,821, or 54 percent of total properties.
  • Texas has 3,292,082 properties, or 31 percent, and California has 3,114,462 properties, or 29 percent.
  • Looking at only the percentage of properties outside an SFHA, which are at high or moderate risk, Arizona has the highest at 68 percent, followed by Florida at 54 percent and Louisiana at 49 percent.

Please enjoy the full article below;

https://www.insurancejournal.com/news/national/2017/12/06/473276.htm

Please call Lee at Acentria Insurance at 954-351-1960 for free quotes on Home, Insurance, Flood, Private Flood, Car and Auto Insurance, Business & Commercial polices & Life & financial as well as group benefits. I will refer to our best agents around the state of Florida.

 

New NFIP Re-authorization Deadline Holds:   December 8, 2017

 

Despite the recent flood events, it seems that the NFIP re-authorization will likely not occur in time for the Dec. 8 deadline with another short term extension likely.  The good news is that the Disaster Relief proposed by the Administration has forgiven $16 B in NFIP debt and the focus would indicate that it is unlikely that a lapse of the NFIP will occur.

NFIP Debt Forgiveness & the Trump Administration

 

The NFIP’s debt will drop to approximately $14.5B and offer enough available borrowing authority to pay all outstanding claims due to yesterday’s passage of a Disaster Relief Spending bill proposed by the Trump Administration and sent to the President for signature.

 

The Administration’s disaster spending proposal, including 16 B in NFIP debt forgiveness, came with 15 proposed NFIP reforms which could complicate any future NFIP re-authorization discussions.

 

While Wright Flood continues to work to oppose eliminating access to the NFIP for any property unable to find coverage in the private market, we do support proposed reforms that strengthen the development of a private flood insurance market.

What Does it All Mean for NFIP Re-authorization

 

While Congress remains engaged with NFIP re-authorization and reform

issues, Wright Flood looks to take advantage of the additional time afforded by the short term re-authorization to continue the push for our combined priorities including:

  • Long term, prompt NFIP re-authorization;
  • Fair, business driven compensation for WYO insurers and our insurance producer partners;
  • An even playing field to allow private insurers the opportunity to further develop a private market for flood insurance;
  • The ongoing financial stability of a robust NFIP

Please keep in touch and be on call should we need your political action and support during this process.  In the coming weeks, Members of Congress will be visiting areas impacted by Harvey and Irma.  If you see or gain access to any Member of Congress, make certain they understand the importance of long term NFIP re-authorization for the communities you serve and for you as a business in those communities. 

 

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