Homeowners rates, real estate impacted
A new survey shows reinsurance prices in the upcoming renewal will be upwards of 30% more expensive than this year, catastrophe exposed commercial properties are expected to see the biggest reinsurance rate hikes, reinsurance prices are impacting homeowners insurance premiums and that’s now hurting Florida’s real estate market, plus the newest group selling property insurance in Florida. It’s all in this week’s Property Insurance News.
Reinsurance Prices: Global insurance brokerage & risk management firm Gallagher Re is out with its latest survey on reinsurance pricing ahead of the January 1, 2024 renewal period. It surveyed 24 of the reinsurers most active in the regional market this fall and found the overall dollar amount of capacity to be deployed in property Cat coverage was likely to remain flat, with price increases from 10% to 30%. Gallagher Re says reinsurers’ overall appetite for US regional property catastrophe (Cat) coverage remains healthy, but carriers are proving less willing to provide aggregate covers for regional property Cat risk, preferring instead to deploy capital through occurrence excess of loss (XOL) programs. The bottom of programs remains difficult given recent loss activity from severe convective storms.
Cat Exposed Properties Most Vulnerable: Catastrophe exposed commercial property insurance renewals are expected to see some of the biggest rate gains in 2024, due to the challenging reinsurance market and its ever-rising rates. That’s according to broker WTW, which according to Artemis “paints a fairly bleak picture for those with property in regions where natural catastrophes and severe weather are prevalent.” That would certainly include Florida. WTW expects property insurance rate increases of 10% to 25% for those properties.
Florida Real Estate Impacted: We’ve said it before and we’ll say it again: the increasing property insurance rates – driven in part by higher reinsurance prices – are now outpricing home ownership for a growing number of would-be Florida real estate buyers. This article last week by Benzinga, Florida Is Beginning To Lose Homeowners Over High Insurance Premiums, outlines the greater impact this is having on Florida’s economy and the inter-relationship with rising reinsurance costs. Another piece last week, Why the Florida homeowners insurance crisis should worry us all points out that homeowners insurance costs went up 40% this year. It’s why we mentioned in the introduction to this newsletter’s Bill Watch that the Florida Legislature in its upcoming January session could – and should – create a program to provide more public reinsurance capacity to provide more consumer relief. Below is something that we spotted on LinkedIn and found interesting as rising reinsurance costs are part of the 212% increase in catastrophic losses in the U.S. from 2019 to 2022 noted.
Newest Entrant into Florida Market: The Florida Office of Insurance Regulation announced last week that it’s given approval for Condo Owners Reciprocal Exchange to form as a property and casualty reciprocal insurer in Florida. Reciprocal insurance exchanges are a form of insurance organization in which individuals and businesses exchange insurance contracts and spread the risks associated with those contracts among themselves. Policyholders of a reciprocal insurance exchange are referred to as subscribers. Condo Owners Reciprocal Exchange is to be a Florida-based, domestic property and casualty insurer and applied to receive its permit and subsequent Certificate of Authority. It’s the latest among this year’s new entrants to the Florida marketplace, following the past 18 months of legislative reforms.
LMA Newsletter of 12-4-23
