Plus, reinsurance pricing & OIR rule changes
Reinsurance pricing at the June 1 renewals was thankfully flat with some decreases, Southwest Florida communities have resubmitted critical data to FEMA hoping to keep their federal flood insurance discounts, Florida insurance regulators are pursuing a variety of rule changes as they release a new catastrophe claims reporting form, plus a video reminder on critical hurricane season preparation. It’s all in this week’s Property Insurance News.
© Can Stock Photo / radiantskies
Reinsurance Pricing: By June 1, all Florida property insurance companies are required to have completed purchasing the reinsurance they believe they’ll need for hurricane season. Fitch says rates were “generally flat to down slightly,” Howden Re reports online rates fell by 5% with the biggest pressure on upper-layers of towers; and Universal Holdings, which owns one of Florida’s largest property insurance companies, reports its rates rose by about 2%. Contrast all of this with the 30%-40% rate increases at the 2023 renewal a year ago.
Another insurer rating agency reports a “moderated rate environment” for reinsurance. In a new report on Florida’s improving property insurance market, it also warns that Florida companies are almost 10 times more dependent on reinsurance than the national average. Florida carriers’ unaffiliated ceded premium rose from $3.1 billion to $6.4 billion from 2019-2023 and despite several years of rate increases on their policyholders, the growth in direct written premium has lapsed growth in ceded premium. “The materially higher position indicates greater direct risk borne by Florida specialists, necessitating more effective risk transfer, underwriting, pricing, and risk exposure management,” the report said. Regulators are studying the reinsurance placements carefully to make sure the rate corresponds to the reinsurance, the risk, and the insurer/consumer reward as we outlined in our last newsletter.
FEMA Flood Discounts: FEMA has now received updated compliance packets from all five Southwest Florida communities that it said in March had allowed homeowners to bypass federal rebuilding rules after Hurricane Ian. Necessary paperwork was lacking on nearly1,000 properties in designated flood zones in Lee County, Cape Coral, Bonita Springs, Fort Myers Beach, and Estero. As a result, FEMA announced it was yanking the 25% discount that federal flood insurance policyholders in those communities enjoy as part of their participation in the National Flood Insurance Program’s (NFIP) Community Rating System. Since then, those communities and FEMA representatives on the ground have been working closely together to gather the necessary documentation. Properties since found to be non-compliant, either missing certain documents or having unpermitted work, have reportedly been given a clear path on how to become compliant by local officials, who are monitoring their progress. FEMA said it is in the process of reviewing all documentation and anticipates providing results by mid-July, including Lee County’s resubmission packet, it posted online. It describes the county’s compliance activities, including why county officials made the decisions they did after Hurricane Ian, the timing of those decisions, and how the county adhered to FEMA, NFIP, and CRS guidelines.
OIR Rule Changes: The Florida Office of Insurance Regulation (OIR) on May 30 held a workshop on proposed rule changes covering Quarterly Reporting to Become Monthly; Workers’ Compensation Audit Rule Changes to Require On-Site Observation; Notices of Nonrenewal, Reinsurance Summaries, and Hurricane Modeling; Changes Governing Reciprocal Insurers; and Greater Fines for Late Filing Annual Reports (some 400-fold!). You can read more in our LMA Policy Update. The proposed changes will go before the Governor and Cabinet this week, with the potential for another public workshop.
Catastrophe Claims: OIR has released a new catastrophe claims reporting form for insurance companies to use in reporting a wide range of data following big storms. The form complies with state requirements for standardized data reporting following natural disasters causing catastrophic damage.
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Hurricane Season Prep: With the highest-ever number of storms predicted this hurricane season, I sat down last week with my good friend and Realtor extraordinaire Martha Harrison with RE/MAX Experts in Lakeland for a short backyard chat that you can watch here. Among the items in this just over two-minute video: talking with your insurance agent now – and then a builder – to make sure you have enough coverage to rebuild after a storm. And don’t forget my handy and printable Lisa’s Lucky 7 Hurricane Season Prep! tips to share with your friends, colleagues, and clients. In the meantime, remember to take advantage of the Disaster Preparation Sales Tax Holiday that ends this Friday, June 14, the first of two such tax holidays this season.
LMA Newsletter of 6-10-24
