May 31st, 2008

Chart: Florida - Risk-adjusted Pricing

Posted at 2:04 PM ET

The Floriday Hurricane Catastrophe Fund (FHCF) continues to play an important role in most companies’ overall reinsurance programs, and price decreases have been more dramatic for higher layers attaching above the FHCF. This results largely from reinsurers’ preference for more remote exposures. Firm order terms (FOTs) for lower layers (sitting below the FHCF) dropped 7 percent to 10 percent relative to June 1, 2007 renewals. Middle layers, usually placed alongside the FHCF, saw decreases of 12 percent to 15 percent, while FOTs for higher layers declined by 18 percent to 25 percent relative to last year.

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