Encouraging news on reinsurance pricing
A new poll showing inflation and rising property insurance prices are the biggest motivators for Florida voters this November, a new forecast for reinsurance pricing and commercial property rates this year, plus a big insurance company is again on the hook for back taxes to Florida. It’s all in this week’s Property Insurance News.
Pocketbook Issues Top Poll: A recent poll of Florida registered voters likely to vote in the upcoming November election shows two issues: inflation/lowering the cost of living (23%) and fixing the insurance crisis (21%) as the most important issue currently facing the state. The poll was conducted by the pro-business group Associated Industries of Florida and involved interviews with 988 voters, with a margin of error of +/- 3.1 percentage points. Combatting illegal immigration (14%), lowering housing costs (10%), and safeguarding access to abortion (10%) were the only other issues to break double digits.
Newest Reinsurance Forecast: Goldman Sachs is forecasting reinsurance pricing in 2024 to grow by the “high single-digits or better,” according to Artemis. Demand by insurance companies, they say, will increase as will premiums ceded by them to the reinsurers. Goldman Sachs says its forecast represents a slow-down in pricing compared to 2023, which grew by up to 30%. Its forecast is similar to one from Fitch Ratings, which anticipates reinsurance prices will start to fall in 2025.
Commercial Property Rates Moderating: USI Insurance Services is out with its 2024 Commercial Property & Casualty Market Outlook, forecasting smaller rate increases than in 2023. “Our forecast calls for 5% to 15% rate increases for non-catastrophe property with minimal loss history and good risk quality; 15% to 30%+ for CAT-exposed property with minimal loss history and good risk quality; and 15% to 30%+ rate increases for those risks with poor loss history or poor risk quality,” according to the report. Last month, broker WTW reported that cat-exposed commercial property insurance renewals in risk-prone areas, including Florida, will reflect rate increases of 10% to 25% in 2024.
Insurance Tax Ruling: Florida’s First District Court of Appeal last week ruled against State Farm Insurance Company in a decade-long dispute with the Florida Department of Revenue (DOR). The court upheld a lower court ruling that State Farm and its subsidiaries owe the state more than $2.6 million in back taxes and interest. At issue is interpretation of state and federal tax laws. DOR argued the company didn’t include the full amount of tax-exempt interest earned on state and local bonds. State Farm argued that those tax exemptions lowered its losses and thus the federal income tax and state tax owed in 2011-2013. There’s been no mention in the case whether other insurance companies have followed similar tax practices.
LMA Newsletter of 1-22-24
