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DALLAS – Property insurance reforms introduced in May in Florida may benefit property/casualty insurers and reinsurers in the wake of Hurricane Ian, though some believe the changes did not go far enough and laws in the state create unique challenges for the market.
After a catastrophe in Florida “we see a tail on the loss that we don’t observe in other states,” said Kerri Hamm, executive vice president, head of business development at Munich Re U.S.
Ms. Hamm was speaking during an interview at the American Property Insurance Association annual meeting in Dallas on Tuesday.
Issues such as assignment of benefits and the ability of homeowners to have significant time to report damage from hurricanes create a unique environment in Florida, Ms. Hamm said.
An assignment of benefits is an agreement that transfers the insurance claims rights or benefits of an insurance policy to a third party, such as a roofing or building contractor.
“Those issues accumulate into a tail that we don’t necessarily see in other states,” Ms. Hamm said.
During a panel discussion on Monday, Paul Anderson, executive managing director, U.S. property growth leader at Aon PLC said there’s hope that some of the recent Florida legislative changes and expected insurance reforms will be beneficial.
Changes with respect to attorney representation and assignment of benefits should have a favorable impact on the market, Mr. Anderson said.
Property insurance reforms passed by Florida lawmakers on May 25 remove the awarding of attorney’s fees in assignment of benefit litigation and restrict the awarding of fee multipliers in property insurance disputes.
Insurers need to be able to make money in quiet catastrophe years so that when a cat event happens, they’re able to pay claims on the coverage they provide, he said.
“We will see firsthand with Ian how some of these (legislative reforms) play out,” Mr. Anderson said.
Tort reform has worked in various jurisdictions in other lines of business such as medical malpractice, said Will Garland, president, centers of excellence, Guy Carpenter & Co. LLC.
“There has to be a balance so tort reform is able to bring available capacity, which in turn will become affordable capacity to the broader marketplace,” Mr. Garland said.
However, Ms. Hamm said from an underwriting perspective, there’s too much uncertainty. “I would like to see Florida go even further, to clean up the legislative legal system abuse issues that we see in that state,” she said.