Mitigating the Impact of Catastrophic Storms on the State of Florida

August 7, 2012

After Hurricane Andrew made landfall in 1992, the State of Florida experienced eleven insurer insolvencies.  Although none of these carriers had been reviewed or rated by Demotech, Inc., the majority of these carriers were reviewed and rated by other rating services.  One of the results of the storm and subsequent insolvencies was the dislocation of Florida’s property insurance marketplace.  In an effort to stabilize the property insurance market, the State of Florida encouraged homegrown insurers and developed state assisted programs which today include Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund.

In 1996 to assist Floridians and domestic insurance companies, Demotech, Inc. was invited to review and rate start-up insurers.  Demotech has reviewed and rated virtually all of the homegrown Florida domiciled insurers.  Our efforts have focused on the assignment of Financial Stability Ratings® (FSRs) to financially stable insurers, including start-ups as well as established insurers.  Over the past several years, legislative and statutory changes in Florida, turmoil in the global financial markets in conjunction with a nationwide decline in residential real estate values and other economic factors have resulted in an increased focus on the financial stability of Florida’s property insurers.

In Demotech’s on-going efforts to assist financially stable insurers, our quarterly review process includes an interactive review and analysis related to the quality and quantity of the catastrophe reinsurance program purchased by the carriers that we review and rate.  To familiarize interested third parties with Demotech’s efforts and observations, we prepared this brief summary of our 2011 and 2012 reinsurance analyses.

The full paper can be accessed by clicking here.

Although this communication was in large part authored by Joseph L. Petrelli, President, Demotech, Inc., requests for information should be directed to Robert M. Warren, CPCU, CPA, Client Services Manager, at