A Rocky Road Head for Florida Insurance Consumers

Rating agency Demotech is currently reviewing the 2019 fourth-quarter earnings and year-end financials of the Florida insurers it rates after indicating in January that several Florida domestic insurers could receive rating downgrades. Demotech President Joseph L. Petrelli provided the following comments on the current state of Florida’s residential property insurance market in response to a request for an update from Insurance Journal.

In 1996, the State of Florida, Department of Insurance, Government and Industry Relations Division asked Demotech to rate the independent, regional and specialty carriers that would focus on depopulating the Florida Residential Property Casualty Joint Underwriting Association, which became Citizens Property Insurance Corporation. We familiarized ourselves with the unique operating environment created by the existence and operation of the FHCF and Citizens.

Over the past two and one-half decades, Demotech has actively monitored the impact of natural disasters, judicial and legislative impact on the unique eco-system that Florida built in the mid-1990s. Private sector impacts, whether macroeconomic, such as conditions in the reinsurance marketplace, the introduction of catastrophe bonds and insurance-linked securities, or the impact of judicial decisions and revisions in carrier and reinsurer claim protocols, procedures or practices have materially impacted business models, operating results and balance sheets of carriers.

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