Florida: Exposure management by any means necessary

Florida’s property insurance carriers face a challenging final few weeks up to their main reinsurance renewal and some insurers are taking steps to lower their exposure through the restriction of coverage, or availability of their policies, we’re told.

It’s exposure management by any means necessary, as carriers look to shape their books into something that is both more appealing for the global reinsurance market, as well as to avoid the problem areas that have driven claims creep and inflation in recent years.

We previously reported that some Florida homeowners and property insurance carriers have been using hurricane deductibles as a way to offset some of the costs related to the reinsurance challenges they face at this year’s renewals.

Some carriers had been imposing specific deductible percentages, to reduce their exposure and to assist them in managing higher retentions that seem inevitable for reinsurance towers getting renewed in 2023.

Another area that exposure is being massaged, in order to present a more attractive picture to the reinsurance market, is in the inwards policies that are getting written, with an increasing number of Florida homeowners insurance carriers looking to restrict cover availability to just the more robust properties to underwrite.

We’ve heard of some carriers reducing their underwriting in specific counties, often the most hurricane exposed, where total insured values (TIV’s) are at their highest.

But there is also a focus on the perceived problem-counties of Florida, when it comes to insurance, where claims litigation and inflation have been elevated through recent years and after storms or hurricanes.

One reinsurance broking source said that this isn’t just about reducing gross exposure.

Rather it’s about massaging down the types of exposure that are looked on less favourably by the reinsurance market, while reducing the tail-risk exposure to litigation and other issues that have been seen as Florida-specific in recent years.

It seems more of a growing appetite to shape the exposure of the primary carrier portfolio in Florida, while maintaining revenue through higher rates, all in an effort to present a more attractive picture to reinsurers, while at the same time reducing the chance of loss surprises for shareholders and investors.

Which makes a huge amount of sense in the current market environment, where reinsurance capital has become more selective and punitive, in how it treats cedents that aren’t taking steps to improve their portfolio quality or to reduce the chance of unexpected losses being ceded.

One recent specific example we’ve learned of, is that Olympus Insurance Company, a Florida homeowner insurance specialist, has told its agency partners that it is implementing specific exposure management changes to certain homeowners, condominium and dwelling property insurance policies.

“Olympus continues to monitor the shifting market conditions, reinsurance costs, competitor appetites and how these trends correlate directly with the type and quality of risks being placed with Olympus,” the company explained.

Saying, “We will be taking preemptive measures to ensure responsible continued growth throughout the state.”

For Broward, Lee, Miami-Dade, Palm Beach, Sarasota and Walton counties, Olympus Insurance Company will write policies on properties with a construction date of 2019 and newer.

For the rest of Florida, the insurer said properties with a construction date of 2014 and newer will be written.

It’s a good example of the changes Florida property insurers are implementing to manage their exposure base, in the face of the difficult market environment.

With more onerous terms, conditions and pricing set to be imposed on Florida carrier reinsurance programs at the renewals, the steps the market is taking to manage exposures appear at least in part a response to the more challenging environment.

Read all of our news and analysis on the Florida insurance and reinsurance market.