Florida homeowners’ insurers saw some good trends in 2023, according to research by KBRA, but they also faced some headwinds from reinsurance issues.
Rising policyholder surpluses, falling loss ratios, and higher premium volumes are some of the trends identified by the credit rating agency. According to the research, numerous Florida homeowner insurers came into 2023 with weaker financial positions as a result of years of heavy disaster losses and an extremely litigious climate. However, the 2023 hurricane season, characterized by above-average storm activity with few landfalls, saw lower claims and total losses compared to prior years.
Florida homeowners’ carriers with a KBRA rating were able to reap the benefits of higher policy prices due to this circumstance, together with major legislative reforms and a comparatively quiet hurricane season. Despite the effect of increased reinsurance costs on the profitability of primary carriers, these variables led to improvements in underwriting and a small increase in surplus.
In the future, KBRA intends to closely monitor industry developments, reinsurance patterns, and hurricane activity throughout the upcoming season. Many players in the market are striving for expansion despite persistent difficulties, so staying vigilant is essential.
The paper also highlighted other important findings, which include:
As a result, carriers are having to get innovative in order to finish their programs, as obtaining reasonable reinsurance remains a struggle.
Legislative reforms passed at the tail end of 2022 have considerably improved the capital positions of homeowners’ insurers in Florida.
Insurers have benefited from the relatively mild 2023 hurricane season, but early forecasts for 2024 indicate the likelihood of more frequent and intense hurricane activity, which could further weaken their financial positions.
Swiss Re’s study predicts that insured losses due to natural disasters will exceed US$100 billion, setting new records.
