This is just a classic PR move of “getting out in front of a narrative to shape it to your own interests.”
I’d love to be a fly on the wall when they attempt to convince their Reinsurers pausing New Business writing wasn’t an emergency move to rehab their portfolio and was actually planned… Pretty standard for carriers to rehab their portfolios while still writing NB and developing new products.
Also having a database of historical data is great and all, but not actually super innovative. Augmented and accurate projection data is where innovation points are won. Historical data however will not, especially in FL, where the rules change frequently, and cause historical data to become less useful overnight in some cases.
Then why was a memo sent out in late January explaining the pause in NB writing was due to growth the previous year? The memo didn’t make it sound like this was a standard move, let alone one done annually.
I’ve worked with them from day 1. Every memo reads the same.
March 23, 2022 at 12:05 pm
FL Analyst says:
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Solvent, I appreciate the clarification. Thanks
March 22, 2022 at 11:59 am
SWFL Agent says:
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Good points but how about the thought that the large number of market disruptions can/will affect all carriers. Example – when carriers stop writing, become insolvent, non-renew policies, or have tremendous rate increases, it can drive unwanted & unplanned growth to the other carriers in the marketplace. Certainly carriers create projections & budgets for reinsurance & staffing.
Of course the big picture needs to be taken into consideration. To plan for smooth sailing in this market…. well isn’t very recommended.
In the case of stemming unwanted/unplanned growth, pulling the plug on NB writing is a last resort measure. There are plenty of other rehabilitative measures one could take to avoid this (you touched on some), if planned. Pulling the plug on NB writing screams they were taken by surprise and didn’t adequately plan to take any other measures to avoid a last resort move like the one taken recently.
I’ve been writing in Florida for 10 years as a personal lines and commercial lines P&C agent. Let me tell you, assuming this guy isn’t blowing hot air, I’d *love it* if insurers had the restraint these guys to.
I have lost track of the amount of time I have had to rewrite a chunk of my book because out of the blue a carrier goes belly up.
Every FL HO policy you write drags you down, deeper and deeper. it doesn’t matter how new or old the house, how many claims, how much superior data you have, how sexy your model and algorithm seem to be or how remarkable your underwriting and claims systems and staff. The average combined ratio in Florida for HO is in excess of 110%, you just can’t keep taking in a dollar and paying out $1.10. Example: Universal’s 2020 CR was 120%, they just closed out 2022 at 130% There aren’t enough tricks to fix that, you just have to close door on new policies and get rid all the worst policies-there is no other choice if you want to survive here.
Partially agree – this market simply swings from one extreme to the other. Keep in mind a lot of carriers were in the black prior to 2016-2017 and able to capitalize on the largest U.S. HO market in terms of direct written premium. But yeah, when it takes a turn for the worst, buckle up.
FL P&C 02-20 here of a decade plus. You really have to wonder where this leaves the market.
Do we need more HO1 and DP1 carriers for these cruddy risks our state seems to have?
Will legislative reform, tort, roof schedule, or otherwise turn it the other way?
Should we fun Citizens more and accept most people go to our FAIR Plan?
I agree with every point you say. Universal’s numbers continue to shock me as one of the larger players, yet I’m still left wondering — In a state that lives off real estate transactions in lieu of income tax, is this really sustainable?
You’re starting to see it already. Owner occupied DP3 and DP1 policies with ACV roof settlement. You’re probably going to see some new carriers only offering those policy forms and some existing players modifying their offerings for new business.
“You get a DP1 with ACV Roof, you get a DP1 with ACV Roof, EVERYBODY gets a DP1 with ACV Roof!!!”
They’re simply the policy form most appropriate for a LOT of the property risks down here. No sense in mandating every single house qualifies for HO3 when large swaths of the market have no business qualifying for HO3.
This is just a classic PR move of “getting out in front of a narrative to shape it to your own interests.”
I’d love to be a fly on the wall when they attempt to convince their Reinsurers pausing New Business writing wasn’t an emergency move to rehab their portfolio and was actually planned… Pretty standard for carriers to rehab their portfolios while still writing NB and developing new products.
Also having a database of historical data is great and all, but not actually super innovative. Augmented and accurate projection data is where innovation points are won. Historical data however will not, especially in FL, where the rules change frequently, and cause historical data to become less useful overnight in some cases.
They have closed every year since inception.
Then why was a memo sent out in late January explaining the pause in NB writing was due to growth the previous year? The memo didn’t make it sound like this was a standard move, let alone one done annually.
I’ve worked with them from day 1. Every memo reads the same.
Solvent, I appreciate the clarification. Thanks
Good points but how about the thought that the large number of market disruptions can/will affect all carriers. Example – when carriers stop writing, become insolvent, non-renew policies, or have tremendous rate increases, it can drive unwanted & unplanned growth to the other carriers in the marketplace. Certainly carriers create projections & budgets for reinsurance & staffing.
Of course the big picture needs to be taken into consideration. To plan for smooth sailing in this market…. well isn’t very recommended.
In the case of stemming unwanted/unplanned growth, pulling the plug on NB writing is a last resort measure. There are plenty of other rehabilitative measures one could take to avoid this (you touched on some), if planned. Pulling the plug on NB writing screams they were taken by surprise and didn’t adequately plan to take any other measures to avoid a last resort move like the one taken recently.
You can “write” yourself right out of business. The reserve ratio will bite you.
In Florida they are rearranging the deck chairs on the Titanic, but that old ship, well, she’s going down.
.
I’ve been writing in Florida for 10 years as a personal lines and commercial lines P&C agent. Let me tell you, assuming this guy isn’t blowing hot air, I’d *love it* if insurers had the restraint these guys to.
I have lost track of the amount of time I have had to rewrite a chunk of my book because out of the blue a carrier goes belly up.
Oh yes, everything is great, let’s stop writing new business and slow down the greatness. Hmm….
Every FL HO policy you write drags you down, deeper and deeper. it doesn’t matter how new or old the house, how many claims, how much superior data you have, how sexy your model and algorithm seem to be or how remarkable your underwriting and claims systems and staff. The average combined ratio in Florida for HO is in excess of 110%, you just can’t keep taking in a dollar and paying out $1.10. Example: Universal’s 2020 CR was 120%, they just closed out 2022 at 130% There aren’t enough tricks to fix that, you just have to close door on new policies and get rid all the worst policies-there is no other choice if you want to survive here.
Partially agree – this market simply swings from one extreme to the other. Keep in mind a lot of carriers were in the black prior to 2016-2017 and able to capitalize on the largest U.S. HO market in terms of direct written premium. But yeah, when it takes a turn for the worst, buckle up.
we’re still in 2022 though lol
Yeah sorry about that, I meant they closed out 2021 @ 130%
FL P&C 02-20 here of a decade plus. You really have to wonder where this leaves the market.
Do we need more HO1 and DP1 carriers for these cruddy risks our state seems to have?
Will legislative reform, tort, roof schedule, or otherwise turn it the other way?
Should we fun Citizens more and accept most people go to our FAIR Plan?
I agree with every point you say. Universal’s numbers continue to shock me as one of the larger players, yet I’m still left wondering — In a state that lives off real estate transactions in lieu of income tax, is this really sustainable?
You’re starting to see it already. Owner occupied DP3 and DP1 policies with ACV roof settlement. You’re probably going to see some new carriers only offering those policy forms and some existing players modifying their offerings for new business.
It’s going to turn into Oprah, but for DP’s
“You get a DP1 with ACV Roof, you get a DP1 with ACV Roof, EVERYBODY gets a DP1 with ACV Roof!!!”
They’re simply the policy form most appropriate for a LOT of the property risks down here. No sense in mandating every single house qualifies for HO3 when large swaths of the market have no business qualifying for HO3.