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Reinsurers refining Florida portfolios on new view of risk: GC

22nd June 2020 - Author: Matt Sheehan

Analysts at Guy Carpenter have noted that there was significantly less deployable capital at the Florida renewals this year, as reinsurers were already refining their portfolios for the state based on a new “view of risk.”

Reinsurance renewalsThe broker noted that the June 1 renewal was the “first genuine test” of the reinsurance market since the COVID-19 outbreak prompted government-mandated lockdowns across the globe.

The pandemic has further driven an already firming reinsurance environment, resulting in pronounced property catastrophe pricing increases, particularly in Florida.

Guy Carpenter believes that most Florida reinsurance business saw double-digit rate increases at June 1, while terms and conditions also tightened.

Reinsurers were also keen to impose communicable disease exclusions and remove cascading features more broadly, although analysts warned that many proposed wording were so broad they risked excluding otherwise covered losses.

For instance, losses related to hurricanes and earthquakes were at risk of being excluded if there was any perceived contribution to the ultimate loss from communicable diseases.

Differentiation between programs was once again significant, analysts added, influenced by factors such as loss experiences, capital strength and perceived litigation/assignment of benefits (AOB) risks.

Cedents who performed strongly against these criteria benefited from enhanced access to capacity and more favourable pricing and terms.

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