The Florida legislative session ended May 4, and as I have done since I opened my firm over a decade ago, I hit the road to go see clients, colleagues, family, and friends along the highways and byways of our beautiful state. I taught legislative update classes including specific curriculum about the new Assignment of Benefits legislation, HB 7065. (You can read more on that in How Florida’s New AOB Law May be Exploited in this newsletter.)
I broke bread every day with someone different so I could learn what happened in the field while I was stationed in The Capitol in hand to hand legislative combat for several weeks. I’ve visited with friends in the federal government that are still involved with Hurricane Michael and Irma relief. And I went by to see legislators in their district offices to thank them for their hard work. I was also interviewed by Tampa’s ABC Action News on the impact recent Kia and Hyundai car fires could have on automobile insurance rates.
Spending the past couple of weeks reconnecting with so many of my readers and supporters has been very rewarding. One of my favorite days was spent with the scientists and big data analytics professionals from AIR worldwide, the world’s leading natural catastrophe modeler. They brought a talented team from their Boston headquarters to host many of you in an all-day forum. One of the most intriguing speakers was an executive with Renaissance Re, a brilliant reinsurance expert who shared the views of her CEO that you can read here about the shifting balance of power from reinsurance buyers to reinsurance sellers at this June renewal in Florida.
As I led a panel of incredible speakers about the state of Florida’s property insurance market and listened to the views of Ren Re, I couldn’t help but be reminded of the 2007 special legislative session under then Governor Charlie Crist and the passage of House Bill 1A (HB 1A ). Many of you were with me watching the debate about this bill and how legislators and the Governor described “greedy reinsurers.” In fact, even federal legislators took note. Take a look at a 2008 script from then U.S. Senator Mel Martinez who said, “Most of the (Florida) State-sponsored plans are not able to spread risk efficiently and not able to build up sufficient reserves to cover a major hurricane. They are forced to charge higher and higher premiums to buy more overpriced reinsurance to keep up with their increasing liability….”
While this was in the context of a 2008 flood insurance discussion, it underscores the repeat of the beginning of what is happening today in the Florida property insurance market despite the foresight the Florida legislature has taken with enacting a change to the Florida Hurricane Catastrophe Fund this session. Despite this anticipated change, Citizens just announced an increase in reinsurance rates and it appears the reinsurers are not giving “credit” for this year’s legislation. Private property insurers are publicly discussing their ongoing reinsurance negotiations that will culminate in a couple weeks and the anticipated increases most likely to hit (see Rising Reinsurance Rates in this newsletter).
The best description of how the reinsurance community might want to reflect on legislative history is to read Demotech CEO Joe Petrelli’s May 14 story Transformers Or Aesop’s Fables? One Rating Agency’s Look At Florida
So I will leave you with this. The lessons of life include fables, history and reality. Perhaps the reinsurer community will want to consider present day risk realities on which both insurance – and reinsurance – must be priced. Up next: more news you can use!
LMA Newsletter of 5-20-19