Demotech recently said Florida insurers have boosted their financial stability and reassessed capital reserves after the agency suspended previously applicable guidance and warned carriers to take stock of their rating adequacy, or face potential downgrades due to a change in the Floridian operating environment.
The announcement comes after Demotech’s review of its data collection effort – a move to reassess the strength of Florida insurers given the changed operating landscape.
Demotech previously cited concerns over rate adequacy after “severe weather, the unresolved AOB issue, and the recent Johnson and Sebo cases” significantly changed the scope of potential costs and risks for carriers.
But industry reviews have shown that carriers in the region responded positively to these concerns, undertaking necessary proactive measures to maintain positive ratings and sufficient capital reserves.
As part of its data collection and research, the agency requested firms to submit projections of their year-end 2016 results.
These, and other results demonstrated that despite the tough market environment, Floridian insurers have for the most part come out favourably with a still strong position and year-end surplus.
“We are pleased to report that despite the onslaught of severe weather in 2016, in their year-end 2016 financial reports, the carriers we review and rate reported an additional $155,000,000 of surplus at year-end 2016 versus 2015. This was the result of capital contributions along with some carriers’ operating profits,” said Demotech.
After Floridian insurers took measures to reassess loss adjustment expense reserves, Demotech said results show an extra $200 million in reserves at the end of 2016, compared with year-end 2015.
The firm said; “Viewed in tandem, these year-end 2016 results mark the culmination of a remarkable recommitment to Floridians seeking property insurance.”
Although, Demotech added, their requests for a renewed commitment of financial reserves were not universally embraced by Florida carriers – some firms chose instead to turn to alternative strategies.
The agency said additional information, affirmations, and downgrades will be released no later than March 16th, 2017.
