Florida CAT Fund Reforms
In January of 2007, Florida Governor Charlie Crist passed legislation that will add an estimated $17 billion in state-backed capacity to the Florida Hurricane CAT Fund for reinsurance purchasers. This increase in surplus allows the FHCF to directly write an even greater volume of reinsurance coverage for property catastrophes at below market levels. Furthermore this new legislation has put a mandatory freeze on all private insurance rate increases, also not allowing for an nonrenewals or cancellations.
These changes in the Florida legislation will have drastic effects both the reinsurance and private insurance markets. Reinsurers can expect to see an increased competition for a smaller market as they had previously placed a large percentage of their surplus into the Florida market. Private insurers can expect to see drastic changes as well as they can no longer raise rates to offset the cost for further protection and may be concerned with the implications of the FHCF running out of funds on a second or third event loss.
EMB has begun to help several companies, both in the reinsurance and private lines markets to develop solutions around these problems. With the use of Igloo Professional EMB hopes to help companies model the impact of these changes and help them to prepare for the future implications.
If you would like to know more about how IGLOO Professional could be utilized please contact either Thomas Hettinger or Andrew McLennan at (858) 793-1425 to learn more, or for assistance. If you are not an IGLOO Professional user, but looking for some quick help, you may also contact Tom or Andrew.
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