Citizens Property Insurance Corporation is anticipating a hardening market as a result of hurricane Irma and other global catastrophe events experienced in the second-half of 2017, and is budgeting appropriately.
The Florida state-backed insurer has announced its risk transfer plans for 2018, revealing that it will look to secure $1.45 billion of risk transfer for a total cost of $100 million. This is compared to Citizens securing $1.33 billion of risk transfer at a cost of $93 million last year, while the rate-on-line is expected to remain relatively flat, year-on-year.
Despite Citizens experiencing a $1.1 billion hit from hurricane Irma, net of anticipated reinsurance recoveries, the insurer said previously that it had retained a capital surplus of $6.4 billion, and, has now underlined its expectation of a hardening market as a result of global catastrophe losses.
“Citizens will again seek to protect surplus through prudent and measured risk transfer efforts in 2018,” said the firm.
For 2018, Citizens budget includes a provision for $100 million of private risk transfer within the Coastal Account, which, is an increase of roughly 8%, or $7.3 million when compared with the 2017 programme.
“While Citizens has enjoyed the relative favorable pricing within the market over the last several years, a hardening market is anticipated as a result of not only Hurricane Irma, but other catastrophes around the globe,” said Citizens.
The events of the third and fourth-quarters of 2017 are expected to result in a modest level of upward pricing pressure for the 2018 renewals, which the insurer explained has led to an overall net increase in budgeted reinsurance costs, in spite of lower reinsured exposure with the Coastal Account.
