Fla. Insurers See Hurricane Insurance Market on the Mend

Feb 25, 2008

Insurance Journal--Feb. 25, 2008

The insurance market in Florida is adjusting to changing conditions � some man-made, others resulting from forces of nature � all of which make property insurance for Florida homeowners more available and more affordable, according the Florida Insurance Council.

One of the most notable changes is increased new writings from private insurers � controlling the growth of Citizens Property Insurance Corp., and most of this is from a growing cadre of Florida-based insurers, said Sam Miller of the FIC, in a written statement.

In fact, the Office of Insurance Regulation reports that the Florida "domestic" insurers’ share of the residential, property market is nearly double what it was in 2005. The most recent OIR data is through the third quarter of 2007. That data shows Florida domestics have 3.2 million policies or 44 percent market share, up from around 20 percent just two years earlier, Miller added.

In addition to availability, homeowners’ insurance rates are down an average of 16 percent from this time a year ago. Insurance Commissioner Kevin McCarty reported to the Senate and House committees recently that every residential property insurer doing business in Florida reduced its rates effective June 1, 2007 as a result of the presumed factor filing � the fist of two filings required by last year’s special session legislation.

McCarty reported that the presumed factor filings resulted in an average reduction of 15 percent with an additional 1 percent reduction produced from the second, True-Up filing.

Furthermore, most homeowners are seeing additional rate relief through increased wind mitigation credits aided greatly by the legislative support given to the My Safe Florida Home Program, Miller said.

The commercial market is also making adjustments that are benefiting consumers. While concrete data is not yet available, the Florida Association of Insurance Agents reported to the Citizens Property Insurance Corp. Board in late January that anecdotal evidence is showing commercial property and casualty rates are dropping 30 to 40 percent upon renewals and in this line of business, most consumers are finding ample coverage and good rates in the private market.

According to Miller, the greater availability of coverage and the overall lower rates for coverage can be attributed in large part to the fact that no major hurricanes landed in the state over the past two seasons.

Reinsurance costs were a huge factor for the increase in rates that followed those two storm years. On average, global, private reinsurance costs imposed upon Florida spiked 76 percent following the 2005 hurricane season. However, after a relatively calm 2006 season, reinsurance rates dropped 10 to 20 percent in Florida and reinsurance brokers report there could be another reduction of 10 to 15 percent in some cases as direct insurers throughout the Atlantic and Gulf coast states negotiate contracts for the 2008 hurricane season.

Lower private market reinsurance costs translate into lower premiums for Florida homeowners, Miller concluded.

Source: Florida Insurance Council