Speaking during the Marsh McLennan first-quarter 2021 earnings call, CEO of reinsurance broking arm Guy Carpenter, Peter Hearn commented that at the upcoming mid-year reinsurance renewals, Florida will have to be separated from other business.
Hearn said: “We have to separate Florida from the rest of our portfolio because it’s a different animal in a lot of different ways, not only from a regulatory environment, not only from a capital environment, not only from a capacity environment, not only from a legal environment.”
He noted that as they look into the rest of the year, they anticipate that for the broad percentage of its portfolio, pricing will remain consistent.
“Florida, obviously, has gone through quite a turbulent time not only from a loss standpoint, but an underlying erosion of capital due to heightened litigation. What that’s resulted in is demand is actually going to be less because people are re-underwriting their books of business to deal with some of the spikes and exposure that they have.
“Overall, I would say there is more than enough capacity in Florida. And for the non-frequency layers and more capacity layers, there will be plenty of capacity. And for the lower down, higher risk layers, pricing will go up. We are still unsure as to what the dimensions are.”
Hearn concluded by saying that although the industry is expecting mid to high-single digits for high loss experience, it’s still a wait and see situation.
“But a lot of the capital in Florida comes from third-party capital, unlike the rest of our portfolio say for our retrocessional business.”