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Tuesday, May 30, 2023

Florida’s Property Insurance Crisis Raises Taxpayer Risk From Hurricane Ian & More Latest News Here

The challenges that the Florida property insurance market has and will face successfully increase the exposure of Florida taxpayers to the additional monetary impact that should be a significant loss from Hurricane Ian, it seems.

Hurricane Ian is headed to the Florida peninsula, and as we’ve previously defined it, the outcome has the potential to cost the state’s insurance coverage and reinsurance market billions of dollars.

However, while there is full focus on how much this occasion affects our readers of the insurance, reinsurance and insurance-related securities (ILS) markets, it is necessary to additionally consider Florida, the property insurance market that is the focus of attention during this hurricane. , just not in perfect condition, at best called dysfunctional.

Measuring how much taxpayer publicity about the hurricane goes beyond Artemis’ pay grade, but we really think it’s a necessary difficulty because this year, perhaps more than ever, the consequences of the significant business losses from the hurricane may once again be Appearance basically divides the taxpayer the most.

Property insurance coverage market challenges in Florida have culminated this year. Reinsurance renewals are basically the toughest in years. What some call a truly exhausting market pricing. As a result, there may be less non-current Florida The public reinsurance market is better advertised than it has been recently.

Since Florida homeowners insurers have been able to buy far less reinsurance this year, many are buying the absolute minimum they can get away with, while at the same time, insurers of Florida residents as a last resort are buying less reinsurance. much more. If needed, reinsurance capital security may be much less to withstand Florida taxpayer storm losses again.

In addition to this, the legislature this year implemented the $2 billion Reinsurance Assistance for Policyholders (RAP) program, which was authorized as part of a specific session in late May and as a kind of lower-tier Florida Hurricane Hazard Fund (FHCF) , which again means additional threats closer to where taxpayers may be affected.

Florida residents have been hoping to buy more than $3.5 billion in catastrophe bond reinsurance and threat conversion somewhere this year, but only bought $1.25 billion in the latest threat conversion in the long run.

Still, residents have another $1.285 billion worth of catastrophe bond-backed reinsurance which is very good, but overall, the opportunity switch program is much smaller than in earlier years, mainly due to higher prices for reinsurance renewals, This makes buying additional insurance much less interesting.

Despite all the different funding sources for Residents, the hype for Residents has grown rapidly as private market reinsurance and catastrophe bonds declined.

Just recently, it hit 1 million policies for the first time since 2013, and with that number rapidly rising, we think Tampa Bay and the west coast of the Florida peninsula are a fast-growing space for the ultimate insurer.

While residents have significant claims-paying capacity, the actual fact that their reinsurance has declined does suggest that taxpayers are closer to opportunity than before, as the likelihood of levy assessments may increase, along with a high-level publicity threat pool within residents.

As mentioned earlier, we cannot calculate whether the assessed probability is better due to the reduction in reinsurance, but it is certain that the resident surplus is additionally covered, and the result must be that {that} actual major losses may see better pressure Continue to pay extra price to taxpayers.

Successfully, taxpayers appear to have moved Florida’s hurricane threat a few steps away by buying much less reinsurance in their portfolio of Florida real estate threats, and state funds and ultimate insurers taking on additional threats.

There is also the potential for taxpayers to drop high prices following a storm like Hurricane Ian, which should be a crucial loss.

Tens of billions of dollars in business losses from Hurricane Ian may only further squeeze Florida’s insurance market, pushing up reinsurance prices in the state further and putting pressure on already undercapitalized insurers and residents.

Significant business losses could result in additional price increases on the main stage, possibly some service failures, while also eroding funding for the state’s hurricane fund, FHCF, potentially significantly weakening residents’ capital base and potentially wiping out brand new The same is true for the RAP fund.

All of this could successfully increase the chances that Florida taxpayers will find themselves in the throes of paying extra for repairs, whether higher premiums or appraisals, or simply by tax {that} dysfunctional property insurance coverage market for the Residents of the state are taxed (because they are).

We’re not even talking about lawsuits, loss widening, and claims creep, all of which legislatures have plenty of options to try to remedy, but at this stage few would dare to think that the reforms enacted so far will bring a very short period of time make a huge difference within.

Hurricane Ian is likely to be a practical look at the state’s licensing system, demonstrating the efficiency of reform and how reinsurance and ILS Pursuit have appropriately adjusted their contracting and advocacy coverage to deal with this uncertainty. state.

Florida’s property insurance coverage market has certainly brought taxpayers closer to an opportunity than they actually need, and perhaps Hurricane Ian (whether a major loss event or not) could give lawmakers the impetus to address more of the market’s problems and successfully bring taxpayers to the table. Events that move people outside of more opportunities while encouraging an additional functioning insurance coverage and reinsurance ecosystem.

Find out our latest news on Hurricane Ian here.

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