The upcoming June 1st, 2021 reinsurance renewals appear to be orderly, although property catastrophe reinsurance rate increases in Florida are expected to come in below expectations, according to analysts at Keefe, Bruyette & Woods (KBW).
After meeting with executives this week, analysts have determined that when compared with last year, Florida property cat rate rises will be muted.
For loss-free accounts, increases are coming in at the mid-to-upper single digits, with loss-impacted accounts experiencing bigger increases, says KBW.
However, while rate rises look to be coming in below expectations, analysts note that the June 1 reinsurance renewals do appear to be orderly, driven by adequate overall capacity, with the lower-than-expected decreases attributed largely to fading demand as primary carriers shrink their books.
For non-catastrophe lines, the majority of management teams KBW spoke with were optimistic about price adequacy and pricing trends.
At the same time, most insurers expect continued concerns about elevated property and casualty loss cost inflation and reserve challenges, relating to both COVID-19 and broader casualty lines’ under reserving.
Analysts at KBW also discussed Florida legislation with executives in light of recent efforts to improve the marketplace. Overall, executives appeared optimistic about the impending legislation in the region.
In 2019, the passing of the Assignments of Benefits (AOB) reform bill in the U.S. reportedly resulted in a 50% reduction in Florida claims, and analysts note that executives also anticipate a positive impact from the most recent legislation, but cautioned that pre-existing issues will remain.
