Florida Property Rates

Rates continue slight upward trend

2009-10-06T11:03:00.000-07:00

Rates in September continued to improve slightly. Standard construction rates continued to hang in the 1.20 - 1.30% range. The increase was driven more by increases in rates for superior construction, which are back to the 1% range

Rates improve slightly in August

2009-09-15T09:28:00.000-07:00

Rates increased a tiny amount in August as carriers began to feel capacity constraints. However, just as several large carriers began to cut off agents from writing wind coverage, others stepped back into the market after being unheard from for several months. Demand for insurance remains weak as construction in Miami-Dade county has essentially shut down.

Rates poised for increase

2009-08-05T09:46:00.000-07:00

The SFRI increased slightly in July over June. Standard markets remain aggressive in South Florida and willing to take on more cat exposed risks. However, for the first time, rates seem poised to increase. We expect to see 5-10% increases over the next 6 months. Although carriers have been talking about the hard market since last October, there has been no real action because capacity has not been an issue. However, several large players have stopped increasing their exposures recently. In addition there are positive signs of economic recovery. Real decreases in capacity combined with economic optimism is the formula needed to bring rates up to actuarially sound levels. And a storm could be the catalyst to get them moving.

Rates drop slightly in June

2009-07-02T07:56:00.000-07:00

The SFRI dropped slightly from 0.83 to 0.80 in June. Rates on small to mid-sized commercial properties remain flat. Despite the efforts of the large domestic surplus lines carriers and Lloyds to promote market discipline, over supply and dampened construction activity are keeping rates low. Standard markets continue to be more aggressive in Florida than in the past. The passage of a bill that caps rate increases to 10% does not give much hope that demand will increase in the short term from accounts leaving Citizens.

Rates Improve slightly in May

2009-06-08T07:04:00.000-07:00

The SFRI increased more than 3% in May. Talk of the hard market continues but has done little to increase rates. Underwriters have been disappointed that reinsurance increases have not translated into higher retail prices. However, the economy and aggressive standard markets have kept rates steady. Travelers is reported to be "very aggressive" on new business in Florida while holding or raising renewal rates. We may not see tightening until hurricanes begin to form in the Atlantic and standard markets begin to pull back

Good article

CNN Article on Insurance Market

SFRI Drops 6%

2009-05-04T07:18:00.000-07:00

The SFRI dropped 6% in April vs. March demonstrating that the hard market is not a reality yet for mid-sized property insurance in the Tri-County area. Rates for standard construction were flat. A drop in rates for superior construction (Fire Resistive and Modified Fire Resistive) caused the index decline. Overall the market continues to wait for rate increases, but demand for insurance in Florida overall is weak due to a lack of new construction and an increase in standard market activity. According to the Florida Surplus Lines Office, property and casualty premium and policy count dropped 5% and 8% respectively in the first quarter of 2009 vs. the same period in 2008.

Rates improve in March

2009-04-20T08:20:00.000-07:00

The SFRI increased by 13% in March led by improvements in pricing for standard construction (Joisted Masonry and Masonry Non-Combustible). Competition for business remains fierce given the economic decline in South Florida.

SFRI increases 13% in January

2009-02-03T07:22:00.000-08:00

Average rates increased by 13% in January. Carriers have begun a campaign to increase rates as a result of less capital and higher reinsurance costs. Amrisc has announced price increases. Lloyds holding the line on any rate decreases for renewals. However, rate increases are dampened by poor economic conditions. For the first time, demand is playing a larger role in the pricing of property insurance. Florida has gone from near double-digit gdp growth to a decline. Exposures and replacement value costs are declining as well.

SFRI drops 18% in December

2009-01-07T12:15:00.000-08:00

Although everyone is geared up for the hard market in 2009, it clearly did not get started early. All construction classes saw rate decreases in December as the demand for coverage plunged.

SFRI Stays relatively flat

2008-12-09T10:49:00.000-08:00

The November SFRI dropped from 0.86 to 0.85. News of capacity reductions and higher reinsurance rates in 2009 have the markets predicting harder times. However, demand for insuance has dropped considerably when compared to 2006 and 2007. Construction of commercial buildings has nearly slowed to a halt. Businesses are willing to retain more risk in an environment where it becomes more important to save cash.

Correction: SFRI falls 9%

2008-11-05T13:28:00.001-08:00

October SFRI fell 9% to 0.86. This is a correction from an earlier post that showed an increase. The declines were driven by a drop in primary demand over the month as the financial crisis reduced business activity and construction projects. Both domestic carriers and Lloyds are doing their best to hold rates constant. Most are sticking to expiring rates for renewals. However, at the same time, underwriters are being more liberal on new business. The combination of lower demand, higher price sensitivity, and increased carrier switching is creating an environment of rate decline.

September rates flat

2008-10-03T12:31:00.001-07:00

Rates stayed steady in September as storms continued to threaten several coasts. The biggest news for the insurance markets was the demise of AIG and the possible impact it will have on property capacity. Several property markets are releasing lower earnings and there are many rumors about investment portfolios being impacted by sub-prime. It is hard to find an argument to refute the assertion that there will be less capacity in the market during 2009. The question remains: just how much will demand fall as a result of the economic downturn?

Rates continue to increase as hurricanes line up

2008-09-08T13:24:00.000-07:00

The South Florida Rate Index increased more than 15% in August as hurricanes lined up threatening Florida and the gulf states. Rates across all construction types increased in unison. Whether this spells the end of the soft market in South Florida cannot be known until we see the markets reaction later this year after the threats have subsided. Some of the rate increase came naturally as carriers stopped writing business for several weeks.

July rates increase 13%

2008-08-07T12:16:00.000-07:00

July was the first month of rate increases in South Florida since April (which may have just been a fluke). Both standard construction and superior saw gains as aggregate capacity is being depleted and underwriters get more nervous about the hurricane season. We probably will not see rates going up much over all, however recent activity suggests that rates are at least stabilizing.

June Rates Plateau

2008-07-14T10:12:00.000-07:00

Although we cannot say that rates have officially bottomed out, it does appear that accelerated declines are over. The SFRI declined less than 1/4 of 1% in in June. Superior construction was steady in the 0.80% range, while standard construction declined slightly and now stands between 1.05% and 1.10%

May rates continued to decline

2008-06-09T11:44:00.000-07:00

Rates declined further in May. The SFRI dropped 15% from 0.88 to 0.74. The drop was driven by standard construction risks. Superior construction rates flattened out in the 70 cent range, whereas the standard construction risks dropped to around $1.10 - 1.20. Overall, rates have fallen about 19% so far in 2008

Rate declines may be slowing

2008-04-08T11:22:00.000-07:00

The SFRI slowed its decent slightly in March, possibly signaling that we may be approaching the bottom of this market decline. Average rates for Standard Construction barely moved from February to March and remain in the $1.20 - $1.30 range. Superior construction declines continued and accounted for the index moving lower. We are seeing larger, superior construction risks binding at less than $0.70 in the TriCounty area.

SFRI drops 7% in February

2008-03-06T13:43:00.000-08:00

Property insurance rates continued to drop in February. The SFRI fell from 0.91 to 0.85 in February. Buildings with superior construction, which have been dropping faster than the average, slowed down their decline a bit. JM and MNC construction showed the biggest drop. Rates continue to remain around 1% for superior construction and in the 1.1 to 1.3% for standard construction.

Market Conditions in January 2008

2008-02-13T12:59:00.000-08:00

Market rates dropped significantly in January. The SFRI fell from 1.33 to 0.91, a reduction of more than 35%. Increased capacity from capital raised in 2007 along with an relatively quiet year for storms continued to drive the market down. Competition is becoming more intense. Whereas at the end of 2007, new business was being shopped, 2007 has seen renewals under attack.

Florida (E&S) Commericial Property Policies 2007 vs 2006

2008-02-05T20:40:00.000-08:00

Lloyds continued to expand in the commercial property during 2007, booking 53,000 policies vs. second ranked Scottsdale (count) with just over 6,500 policies. In premium terms, Landmark was second with $114 million vs. Lloyds $476 million. Lloyds grew policy count by more than 15% and premium volume by 12% over 2006.

Source: Florida Surplus Lines Office, Horan Goldman

In addition to Lloyds, carriers who made significant gains in 2007 included Pacific, Colony, and Clarendon. Carriers who played more conservatively in Florida during 2007 included Essex, Indian Harbor and Landmark

About the South Florida Rate Index (SFRI)

2008-02-01T13:42:00.000-08:00

In the spirit of fact-based analysis, we created the South Florida Rate Index (SFRI). This index represents the rate trends in commercial property insurance that we write in Tri-County. The index is weighted 50% superior construction (Fire Resistive, Modified Fire Resistive) and 50% Standard (JM, MNC). Most risks are between 5 and 10 miles from the Ocean.