Global reinsurance giant Swiss Re looks set to remain underweight on Florida reinsurance business, as unless the market accepts its view of risk, the company is unlikely to expand in the state and lacks optimism on the potential for pricing to rise adequately, its CFO John Dacey explained this morning.
Speaking during the reinsurers’ media call after announcing its first-quarter 2022 earnings this morning, Dacey painted a pessimistic picture of the Florida property insurance market.
We’ve been documenting Florida’s ongoing challenges in the property insurance space and with little changing in advance of the reinsurance renewals, prices are certainly set to rise there.
But this may not be sufficient for an underwriter like Swiss Re to increase its stake in the state, despite the firm having been growing strongly in natural catastrophe reinsurance over the last year.
Commenting on the situation in Florida, Swiss Re’s CFO John Dacey said, “Historically we’ve believed the Florida market has been underpriced and rates for the actual risks of loss across the state are not appropriate, so we’ve been systematically underweight this risk, although we do have some exposures.
“The state of that market, what you’ve seen is losses that have been from fairly moderate hurricane season that have laid bare that rates have not been adequate.”
He went on to highlight the issues with litigation and fraudulent claims, which have led to Florida’s property insurance crisis being dubbed a litigation or fraud crisis instead.
While there is a special legislative session set to be held before the end of May, Dacey did not sound particularly optimistic that this would solve any of the issues anytime soon.
“Swiss Re will continue to require adequate pricing for any risk we write there,” Dacey said, adding that, “if the market is prepared to accept our view of what the risks and expected loss costs are, then we’ll write it.
“But I don’t feel optimistic we will find important price adjustments.”
He closed, “If there are, we will come in. But we’ll only do so at what we find to be adequate rates.”
Read our coverage of Florida’s property insurance crisis below: