Swiss Re not optimistic on Florida reinsurance pricing: CFO Dacey

Global reinsurance giant Swiss Re looks set to remain underweight on Florida reinsurance business, as unless the market accepts its view of risk, the company is unlikely to expand in the state and lacks optimism on the potential for pricing to rise adequately, its CFO John Dacey explained this morning.

Speaking during the reinsurers’ media call after announcing its first-quarter 2022 earnings this morning, Dacey painted a pessimistic picture of the Florida property insurance market.

We’ve been documenting Florida’s ongoing challenges in the property insurance space and with little changing in advance of the reinsurance renewals, prices are certainly set to rise there.

But this may not be sufficient for an underwriter like Swiss Re to increase its stake in the state, despite the firm having been growing strongly in natural catastrophe reinsurance over the last year.

Commenting on the situation in Florida, Swiss Re’s CFO John Dacey said, “Historically we’ve believed the Florida market has been underpriced and rates for the actual risks of loss across the state are not appropriate, so we’ve been systematically underweight this risk, although we do have some exposures.

“The state of that market, what you’ve seen is losses that have been from fairly moderate hurricane season that have laid bare that rates have not been adequate.”

He went on to highlight the issues with litigation and fraudulent claims, which have led to Florida’s property insurance crisis being dubbed a litigation or fraud crisis instead.

While there is a special legislative session set to be held before the end of May, Dacey did not sound particularly optimistic that this would solve any of the issues anytime soon.

“Swiss Re will continue to require adequate pricing for any risk we write there,” Dacey said, adding that, “if the market is prepared to accept our view of what the risks and expected loss costs are, then we’ll write it.

“But I don’t feel optimistic we will find important price adjustments.”

He closed, “If there are, we will come in. But we’ll only do so at what we find to be adequate rates.”

Read our coverage of Florida’s property insurance crisis below:

To ensure progress in Florida reinsurers could pull capacity: Assured Research.

Full placement of Florida reinsurance programs to be challenging: AM Best.

Florida Governor sets property insurance special session for end of May.

“Cause for concern” as AOB & litigated claims rise in Florida: CaseGlide CEO.

FedNat downgraded, posing another threat to Florida’s insurance ecosystem.

Ida insolvencies continue, as Florida runs out of road: ALIRT.

Florida property insurance market “in collapse”, special session uncertain.

Florida renewal “one of the toughest in recent memory” – JMP Securities.

Policy growth means more cat bonds & reinsurance for Florida Citizens.

Florida Citizens seeks higher rate increases at upcoming hearing.

Lighthouse the first to lose Demotech rating, as Ida losses weigh.

AIG’s Lexington pulls-back in Florida, raising questions on E&S market.

AM Best cites Florida market challenges as it downgrades Florida Farm Bureau.

Demotech calls for Florida market reform with rating downgrades likely.

Florida Citizens targets “the best deal we can get” on risk transfer: Montero.

Florida insurers’ litigation exposure still of concern: CaseGlide CEO Todd.

No quick fix as Florida property insurance reforms fail to pass.

Another one bites the dust – Florida’s insurance failures continue.

Florida P&C claims litigation concerning, as cases soar: CaseGlide CEO Todd.

Florida P&C rate filings show reinsurance firming needs to continue.

Assignment of benefit (AOB) claims rising for Florida P&C insurers.