|Date:||July 19, 2017|
|Source:||GC Capital Ideas|
In an interview Guy Carpenter’s Lara Mowery, Managing Director, discussed the drivers of the continuing rate reductions in Florida and what it means for the rest of the market. Here she discussed the assignment of benefits crisis in Florida on this year’s June 1 renewals.
What is the effect of the assignment of benefits (AOB) crisis?
AOB is certainly a topic for discussion and it is something that companies were prepared to talk about through their renewals. Reinsurers were very curious about what the impact to a given company has been and whether different companies were doing different things to handle it and therefore experiencing different outcomes regarding AOB.
Every year reinsurers like to delve into companies’ qualitative factors. It is not just about putting the exposure into a model and the model spitting out a number and solely going off that number. This year, in part because pricing has tightened to the extent it has and partly because of things like AOB and the test of companies’ catastrophe management plans during Matthew, we saw a bit more focus on those qualitative factors.
Reinsurers in general have become more sophisticated about evaluating individual company characteristics and we are seeing more variability in renewals. It makes it more difficult to generalize the market and its behavior. While there is general pricing movement in one direction or another, Florida renewals tend to be more customized than they used to be.
This piece first appeared on InsuranceLinked