The many named storm events that have affected Florida created a big impact on carriers that had to deal with more claims than anticipated. | Pixabay
Many of Florida’s domestic carriers whose fate hadn’t been decided by Demotech yet avoided ratings downgrades by making enhancements to their business models.
Financial and market situations are making it difficult for insurance carriers in Florida, the ratings agency said.
“Our view of Florida’s current residential property insurance marketplace is that the numerous financial and market-based criteria that affect Florida residential property insurance have never been more difficult for carriers to navigate since we first rated Florida-focused carriers in 1996,” Demotech said in an April 2 report.
Carrier-specific financial metrics and the marketplace drove the need to consider downgrades, Demotech said in its report.
Some Florida insurers were asked to provide projections of their year-end 2019 financials after reviewing third quarter results in November, the Insurance Journal reported. Demotech asked questions based on the lingering impact of judicial activism, weather events, reinsurance cost increases in 2019 and what was expected in 2020.
The insurers were asked if they would continue to focus on residential property insurance in Florida and how they would revise their business model to handle existing conditions, Insurance Journal reported.
Demotech affirmed a number of carriers in March, carriers for which the financial analysis firm had not decided were affirmed after making the enhancements.
The financial analysis firm warned early this year that up to 18 Florida carriers could see downgrades from deteriorating insurance market conditions in the state.
The ratings firm downgraded one company and another, Anchor P&C, ceased operations after receiving a Financial Services Rating (FSR) rating of M. Nine other companies enhanced their business models, while a carrier with an FSR of A acquired Anchor Specialty FSR of A. And four companies with FSR of A – Omega, Tower Hill Select, Cypress TX and Prepared – merged into carriers with the same rating.
The nine companies that adopted enhanced business models were Centauri Specialty, Centauri National, Safepoint, Gulfstream P&C, Avatar P&C, Security First, Tower Hill Signature and Cypress P&C.
Demotech told Insurance Journal that the nine carriers “aggressively enhanced the capability of their business models to respond to the anticipated continuation of jurisdictional and weather-related challenges, the substantial increase in reinsurance costs during 2019, the likely increase in the cost of reinsurance in 2020 and the cost of the Rapid Cash Buildup Program of the Florida Hurricane Catastrophe Fund.”
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