Rates Increase? Denied Coverage? Non-Renewed?
It is no secret that the Florida Home Insurance market is one of the toughest markets for home insurance companies in the entire US. In fact, many of the national carriers refuse to offer home insurance homes in Florida because we are the lightning capital of the world, hurricanes have us on eggshells every year, we’re susceptible to hailstorms among other things.
Oftentimes, we will enter into a season in the home insurance market where it seems like every carrier is raising their rates or non-renewing policies or tightening guidelines to where seems impossible to find a competitive home insurance policy. When this happens, all eyes turn to one place……reinsurance.
Similar to how you have an insurance company to protect your home against covered perils, your insurance company likely has insurance companies that they cede risks to in an effort to protect your insurance company against losses. By having reinsurance, insurance companies can maintain an A-Rating, write more insurance policies, and do not have to maintain so much capital on hand.
The downside, however, is that the reinsurance companies are largely unregulated and therefore essentially control the market. When the cost of reinsurance goes up, the increases affect your insurance companies which ultimately trickle down to you, the homeowner.
To maintain their capital surplus requirements, margins, and A-ratings, your insurance company is left with three options….tighten guidelines in an effort to bring the cost of reinsurance down, non-renew certain policies, and lastly file for rate increase to roll the increased cost of reinsurance to the you the consumer.
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