July 18th, 2017

Excess Capacity in This Year’s Florida Market: Part IV; Hurricane Matthew: Lara Mowery

Posted at 1:00 AM ET

mowery_lara_bio4In 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 Hurricane Matthew’s impact on this year’s June 1 renewals.

Did Hurricane Matthew have much of an impact on renewal discussions?

Matthew was more of an individual renewal factor for this year, and a fairly minimal one. At one point prior to landfall it was predicted to be a USD 30 billion-plus industry event and that could have had more of an impact on companies’ renewals and their assessments of their going-forward needs. But, in the end, Matthew fell more into the discussion of the event it could have been.

Matthew was impactful from the standpoint that for many companies it was the first hurricane to really put their catastrophe management programs to the test since 2005. It also gave reinsurers a front row seat, and the opportunity to ask insurers questions about how their response plans had worked, to consider how companies shared information and how the claims were handled and what process they went through.

Another important consequence of Matthew was conversations around the definition of a loss occurrence. At one point Matthew was forecasted to loop back around and make a second landfall. That prompted a lot of conversation with clients around exactly how their reinsurance coverage would respond, particularly as the majority of Florida programs contained a 120-hour loss occurrence definition. Guy Carpenter had many conversations with reinsurers and going into 2017 renewals crafted an approach to include a named-storm definition for hurricanes where appropriate, so that when an event happens, the product works in the way all parties expect and companies are able to fully utilize the limit they are paying for to cover loss from a single event.

This piece first appeared on InsuranceLinked>>

Link to Part I>>

Link to Part II>>

Link to Part III>>

Link to Part V>>

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