From The Palm Beach
Post:
Insurance regulators said Thursday that about six property insurance companies with as many as 300,000 policies are
in danger of going out of business as early as June.The companies, which the Florida Office of Insurance Regulation would not name, are in danger of not being able to buy the
reinsurance, or insurance for insurance companies, on which most of them rely. And if they cannot buy enough reinsurance, then
regulators will not allow these companies to continue to operate in the state. That means they will have to drop their policies,
potentially sending those customers to Citizens Property Insurance Corp., the struggling state-run insurer of last
resort.
I’ve been surprised that we haven’t heard more of this previously. I had hoped that with the influx of capital into the reinsurance
market that reinsurance premiums wouldn’t overreact too much to the last couple of hurricane seasons. However, as Katrina and
Wilma losses have continued to emerge, it’s understandable that this might happen, at least for carriers that are over-concentrated
in cat-prone areas like Florida.