Plus a ‘first of its kind’ catastrophe model
Citizens Property Insurance is poised to make a big reinsurance buy for hurricane season, Florida’s direct property premiums continue to grow with the rest of the country, and the birth of a new catastrophic model. It’s all in this week’s Property Insurance News.
Citizens Reinsurance Buy: The Citizens Property Insurance Corporation’s Board of Governors has approved the carrier’s reinsurance buy for the upcoming 2025 hurricane season. It authorized spending $550 million to secure private reinsurance coverage of approximately $4.49 billion. This coverage would be comprised of $1.6 billion of existing private risk transfer remaining from 2023 and 2024, and $2.89 billion of new private risk transfer. Under this scenario, Citizens would expose all of its surplus and have a potential Citizens policyholder surcharge of $42 million for a 1-in-100-year event.
“Rate reductions are expected to be in the range of approximately 5% for the layers below the Florida Hurricane Catastrophe Fund and north of 10% for layers above the Cat Fund,” said Citizens CFO Jennifer Montero at last Wednesday’s meeting. She said demand for reinsurance below the Cat Fund attachment point has grown as a result of the Cat Fund retention increasing by almost $1.3 billion, but “it is not currently cost efficient for Citizens to purchase risk transfer below the Cat Fund attachment point.” Both Chairman Carlos Beruff and President & CEO Tim Cerio warned that Citizens “would walk away” from purchasing reinsurance in May if the price is inflated “and doesn’t make sense.”
Growing Premiums: Premiums in the U.S. property and casualty insurance market continue to grow, reaching $780 billion in 2024, up from $742 billion in 2023. Insurance Business reports Florida wrote $71 billion in direct premium in 2024, coming in second behind California at $94 billion and ahead of Texas with $59 billion. Except for a dip in 2022 due to inflation, direct premiums nationally have grown every year since 2014. Direct losses incurred ate up 63% ($492 billion) of direct premiums in 2024, according to the article.
Verisk Launches New Model: Calling it a “first of its kind model,” Verisk last week unveiled its Strikes, Riots and Civil Commotion (SRCC) Catastrophe Model for U.S. markets. The model is “in response to escalating insurance losses from large-scale civil unrest events in recent years,” according to a press release, and will help quantify the financial impacts of those events. Verisk reports that since 2010, strikes, riots, and civil commotion events have led to more than $10 billion in insured losses globally ($3 billion of it in the U.S.), compared to less than $1 billion for terrorism. In the past six years, the insurance industry has faced five events, each causing over $1 billion in global insured losses.
LMA Newsletter of 5-5-25
