FLORIDA RATES ‘SET TO RISE 20% TO 30%’ AT 1/6

Reinsurance rates in Florida are set to rise between 20% and 30% at the June 1 renewal, driven by tightening capacity, analysts have predicted. Primary carriers have struggled to place their reinsurance programmes amid a lack of market appetite for the risk. “This is particularly the case across lower layers of programmes, which points to a traditional hard market amid market dislocation,” Berenberg analysts said. In addition, the industry is concerned recent legislation changes may not be adequate to deal with structural issues such as claims fraud and associated litigation as a result of the assignment of benefits practice, which allows policyholders to pass on the insurance claims to the contractors. Counterparty risk is also a major concern, given the recent bankruptcies of local state carriers as a result of these profitability issues. The capacity crunch has been made worse by the pullback of alternative capital from the reinsurance market.