Although the role of catastrophe reinsurance in a wind exposed region is intuitively obvious to an insurance professional and most insurer rating agencies, the need for transparency, education and open dialogue on this important topic is necessary.
Consumers, members of the media, policy makers and other interested parties need to be reminded that the dollar amount of catastrophe reinsurance protection purchased by individual insurers to protect the interest of consumers and businesses alike is in place annually whether or not the wind blows. In fact, it is likely that the dollar amount of catastrophe reinsurance purchased in recent years, vertical or horizontal, has never been higher.
In an effort to inform, educate and present the facts to all third parties with an interest in the financial stability of the property insurance writers in Florida, the Florida Association for Insurance Reform (FAIR), will convene in an inaugural conference called “The Role of Catastrophe Reinsurance in a Wind Exposed Region” on April 28 in Tampa.
FAIR is a non-profit organization focused on a balanced response to insurance issues. FAIR’s mission is to: establish ongoing dialogue among insurance industry stakeholders to keep communications transparent; and create a road-map of reforms that will balance the interests of policyholders, consumer groups, attorneys, insurers, adjusters, insurance agents and others who are affected by insurance public policy.
The conference agenda reflects FAIR’s goals to be balanced and transparent. Paul Handerhan, senior vice president Public Policy for FAIR invited an all-star panel to kick-off the conference, including: Barry Gilway, president of Citizens Property Insurance Corp., who has overseen and organized the depopulation of Citizens; Kevin McCarty, Florida Insurance Commissioner who oversaw the stabilization of the residential property insurance marketplace; Senator Jeff Brandes who was an architect of legislative enhancements; and Sean Shaw a former Florida Insurance Consumer Advocate, now an insurance attorney with the Merlin Law Group. Each will review where the marketplace has been and where it may be headed.
Britt Newhouse, chairman, Guy Carpenter & Co., invited Michael Warner, director, Conning & Company; Randy Dumm, professor of Risk Management and Insurance at Florida State University and Chairman of the Board at Sawgrass Mutual Insurance Co.; and Daniel Case of Advocate Reinsurance Partners will summarize the reinsurance marketplace from the reinsurance, financial, company and broker’s perspective. They will touch on opportunities for regional and specialty carriers in wind exposed regions, which have never looked better. In addition, they will discuss how pricing, capacity and the availability of alternatives to traditional reinsurance have benefited carriers and consumers.
On the important topic of insurer solvency, John Rollins, chief risk officer, Citizens Property Insurance Corp., as well as Matthew Mosher, executive vice president and chief operating officer at A. M. Best Rating Services, Belinda Miller, Esquire, Chief of Staff at the State of Florida Office of Insurance Regulation (OIR) and others will summarize the opinions and perspectives on the financial stability of the carriers comprising the property insurance marketplace.
According to Demotech’s recent review of Florida carriers and an independent analysis by the Florida Office of Insurance Reform (OIR), catastrophe modeling results over the past several storm seasons show that all carriers would have survived both the 1 in 100 year storm and the multiple storm scenario.
Although the results of the stress tests performed by Demotech are confidential, OIR’s results are public information and appear on its website. Catastrophe reinsurance and the review of the treaties comprising catastrophe reinsurance, in conjunction with the financial stability of the reinsurers providing the coverage or the liquidity of the catastrophe bonds, are integral components of consumer protection that must be reviewed by professionals prior to issuing a rating on an insurer.
Consumers tend to believe that they pay too much for insurance given that there have been a limited number of storms in Florida over the past several years. Other panels at the conference will address this topic and what the drivers of cost increases to consumers are, such as emerging issues like sinkholes, assignment of benefits or other paradigm shifts.
Jay Neal, president of FAIR, will present his vision on the changes that the next 20 years will have on Florida’s property insurance marketplace. FAIR seeks to coordinate cooperation, home hardening efforts and protocols, legislative improvements and an open and enhanced dialogue to assuage the concerns of all constituencies.