Florida experts believe reinsurance pricing in the $500-$700 million market could rise by 10%, according to the Buckingham Research Group.
Kapil Bhatia, head of Raymond James’ Insurance Advisory Group, noted that while a meaningful change doesn’t appear to be on the cards for Citizens book, reinsurance pricing for companies primarily domiciled in Florida could be up as much as 10% plus.
Citizens does not expect to meaningfully alter its reinsurance appetite with $500 million of multi-year coverage that hasn’t yet been tapped into.
At current loss levels, the impact to Citizens reinsurers is marginal.
She added that while smaller carriers might need to look at and possibly raise capital levels, she doesn’t anticipate that a large amount of smaller firms will be insolvent.
However, based on the overall impact to the marketplace, it is likely that Citizens could see some repopulation, as there could now be areas that private re/insurers are hesitant to underwrite after experiencing record-level losses in the region.
Kapil noted that total Florida cover comes to $5 billion; assuming a 12%-14% Rate On Line (ROL) gives the total size of the marketplace as $500-$700 million.
