Let’s hear it for the free market! Seen at Business Insurance:
Florida property catastrophe reinsurance rates will likely fall by 15% on average during mid-year renewals, according to a report released by Guy Carpenter & Co. L.L.C. [...]
The sharpest price decreases include 18% to 25% reductions for the higher layers of reinsurance, attaching above the Florida Hurricane Catastrophe Fund, according to the report.
Lower layers of reinsurance, below the FHCF, are declining by 7% to 10%, while private reinsurance layers usually placed alongside the FHCF are decreasing by 12% to 15%, compared with June 1, 2007, renewals, according to the report.
I know that a lot of reinsurance departments at property insurers are looking forward to a bit of relief, given the softer market and a couple of relatively quiet years in North America. (Yes, it’s been a bad tornado season , but such storms don’t generally impact cat reinsurance industrywide.)
I expect that regulators in certain states will also welcome the news that primary insurers will see a little relief. I do wonder, however, if regulators will remember that it’s difficult to reduce rates when increases requested in part due to increased reinsurance expense weren’t fully granted in the first place.