Hurricane Ian, which caused an estimated $40 billion to $50 billion in damage after striking Southwest Florida last last September, is seen by the global reinsurance industry as the straw that broke the camel’s back after six years of global catastrophe losses, the report said. While reducing lawsuits is “certainly a formidable step in the right direction, it occurs at a time when the Florida property insurance market faces another, perhaps equally existential challenge: obtaining the reinsurance protection so critical to the relatively small homeowners insurers that comprise the majority of this market,” it said.Ī bigger reason for the upcoming price hikes is that reinsurers are waking up to Florida’s vulnerability to natural catastrophe after several years of costly hurricanes and other weather events “that many now attribute to climate change,” the report said. Friedlander says some companies could be forced to pay 70% more for their reinsurance this year.ĪLIRT’s report stated that the looming reinsurance cost spikes are only partly attributable to litigation abuses that were addressed by the Legislature last year and earlier this spring, after being blamed for five years of rising premiums and collective industry losses. Of course, rising reinsurance costs will be passed directly to consumers. The ALIRT report observed that by offering insurers less coverage at higher rates, “it appears that reinsurers, worn down by years of substandard earnings, have also finally cried, ‘Uncle.'” What’s to blame for rising costs? “This could result in numerous financial rating downgrades and potential insolvencies.” “There is growing concern that several Florida residential insurers will be unable to complete their reinsurance programs for the 2023 hurricane season,” Friedlander said. Nearly half of Florida-based homeowner insurers are on a “watch list” developed by the Florida Office of Insurance Regulation, said Mark Friedlander, communications director for the industry-funded Insurance Information Institute (III). Reinsurance costs - which is coverage that insurers must buy to ensure they can cover claims after hurricanes and other catastrophes - could increase by up to 50% for Florida-based insurers before the June 1 start of hurricane season, the report said. Released on May 2, the report paints a dire picture of Florida’s insurance market and warns of a “no-win situation” for Florida-focused homeowner insurers monitored by the firm. The report was prepared by ALIRT Insurance Research, a Connecticut-based firm that analyzes the financial strength of insurers on behalf of insurance distributors, insurers, institutional buyers and analysts. We can thank the increased frequency of catastrophic hurricanes and other costly weather events over the past few years, along with concerns that climate change will continue to send disasters our way, according to a recently released report. Even after lawmakers pulled the plug on litigation incentives that Florida property insurers have long blamed for rising homeowner rates, there’s more insurance sticker shock ahead, experts say.
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