Florida insurers brace for 2024 as reinsurance worries continue – KBRA
Florida insurers brace for 2024 as reinsurance worries continue – KBRA | Insurance Business Canada
Reinsurance
Florida insurers brace for 2024 as reinsurance worries continue – KBRA
Availability and affordability of programs will remain an issue in the coming year
Reinsurance
By
Kenneth Araullo
KBRA has released a report highlighting the positive trends experienced by Florida homeowners’ insurers in 2023, while also warning of headwinds in the form of reinsurance challenges.
The credit agency noted that these trends include increased premium volumes, lower loss ratios, and growth in policyholder surpluses. The report also notes that many Florida homeowner insurers entered 2023 with weakened balance sheets due to several years of significant catastrophe losses and a highly litigious environment. However, the 2023 hurricane season, characterized by above-average storm activity but limited landfalls, resulted in fewer claims and overall losses than in previous years.
This situation, combined with substantial legislative reforms and a relatively calm hurricane season, enabled KBRA-rated Florida homeowners’ carriers to benefit from increased policy pricing. These factors contributed to underwriting gains and modest surplus growth, despite the impact of higher reinsurance costs on primary carriers’ profitability.
Looking forward, KBRA plans to maintain close observation of industry developments, reinsurance trends, and hurricane activity into next season. This vigilance is crucial as many market participants are aiming for growth despite ongoing challenges.
Other key insights from the report revealed that:
There is continuing difficulty in securing affordable reinsurance – a challenge for carriers, prompting them to adopt more creative strategies to complete their programs
Legislative reforms enacted at the end of 2022 have significantly contributed to reversing the prior deterioration in the capital positions of Florida homeowners’ insurers
The relatively mild 2023 hurricane season has been favorable for insurers; however, early predictions for 2024 suggest the possibility of increased frequency and severity of hurricane activity, which may pose a risk of further financial strength erosion for insurers
Meanwhile, another recent report from Swiss Re revealed that natural catastrophes are projected to set new records in insured losses, with estimates surpassing US$100 billion.
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