Florida property insurers pass hurricane 'stress tests'

Florida Property & Casualty Association believes FOIR stress test results should give consumers confidence in their homeowners insurers to withstand the worst case storm seasons.

The Florida Office of Insurance Regulation announced the results of its third year of catastrophe stress tests, which demonstrate that the Florida property insurance market can withstand significant catastrophic losses. All of the 112 insurance companies, including 67 Florida-based insurers, that participated in the Annual Reinsurance Data Call were found to have sufficient reinsurance, capital and surplus to pay policyholder claims in the event of a one in a 100 year storm.

“We’re pleased to see these results, which should give consumers added piece of mind and confidence in Florida’s homeowners insurers,” said William Stander, executive director of the Florida Property & Casualty Association (FPCA), a group made up of 17 Florida-based homeowners insurers.  "The results speak for themselves when it comes to the financial strength of Florida-based companies.”

The stress test covered three of the most challenging historical scenarios:  The first was the great hurricane of 1947 that hit Fort Lauderdale with category 4 winds of 147 MPH.  The second was the Tampa hurricane of 1921, which had sustained winds of 140 MPH.  The third included the four storms of 2004, Hurricanes Charley, Frances, Ivan and Jeanne.

Part one of the data call asked insurers to submit estimates of their planned reinsurance purchases, while the second asked for actual reinsurance purchased. The third data call asked for the names of the reinsurers used.  Florida-based companies were also asked to report how their capital and surplus would withstand each of the three scenarios.  All passed.

Background:  After the four hurricanes of 2004, many insurers fled Florida, leaving homeowners with a few, expensive choices. Today, the market is much healthier, competitive and homegrown. The turnaround came through local entrepreneurship in cooperation with the state’s legislature, governor, cabinet, Florida Office of Insurance Regulation (OIR) and rating agencies.

About the Florida Property & Casualty Association

The FPCA was established in 1997 to represent Florida-based home insurers to foster and promote a healthy and competitive Florida insurance market. Through its lobbying and communications teams, the FPCA works to educate Florida lawmakers, regulators and homeowners on issues and policies that affect property and casualty insurance. The organization is recognized as a source for timely information on insurance legislation and regulation, as well.  www.fpcaonline.org 

Tags: Insurance