Reinsurance News

Demotech extends financial strength review amid Florida challenges

4th July 2022 - Author: Matt Sheehan

Financial analysis firm Demotech has extended its process of reviewing the financial strength of Florida insurers and reinsurers, following a challenging renewal period for firms operating in the state.

demotech-inc-logoDemotech notes that it was one of the early movers in requesting a special session for the Florida legislature to address the litigation crisis devastating Florida’s residential property insurance marketplace.

A session did ultimately take place and introduce a number of reforms designed to alleviate the challenging operating environment for insurers and increasingly high premiums for policyholders.

But many considered the reforms to be too little too late, with many carriers struggling to secure sufficient reinsurance coverage, and some still working to complete their programs more than one month on from the June renewals.

Demotech says that, in light of the special session and other considerations, its team continues to review, analyze, and evaluate Q1 2022 operating results, catastrophe reinsurance programs, disaster recovery plans, catastrophe response plans.

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These factors, and others, influence Demotech’s quarterly assessment of Financial Stability Ratings (FSRs) assigned to carriers writing residential property insurance in Florida.

“When analyzing insurer operating results, whether historical, current, or anticipated, the legislative, regulatory, and judicial environment may be considered in Demotech’s review where legislation, regulations, or judicial decisions could materially impact an insurer’s financial position or its ability to operate consistently given the market conditions of a particular jurisdiction,” said Demotech President and Co-founder, Joseph L. Petrelli.

“Regulatory practices or regulatory actions may affect the operating environment of insurers positively or negatively. Such actions may relate to product regulation, financial regulation, or market regulation,” he explained.

“In some instances, legislation or judicial decisions may also alter the operating environment or risk exposures of certain insurers by altering the policyholder claims and litigation environment or the insurance regulatory environment.”

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