News


Aon Benfield expands in booming Florida market


the growing re/insurance market of Florida, Aon Benfield is to expand its reinsurance and analytical capabilities in the state through a series of transfers and new hires. The reinsurance broker said it will increase


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the number of reinsurance broking and analytics colleagues based in its West Palm Beach office. The office will report into Bob Keane, its


executive managing director, and will initially be staffed by managing directors Gard Olbers and Chris Lux. Olbers has been located in the West Palm Beach


office for three years. Lux has 11 years of broking experience in the Florida reinsurance market and has spent the past six years working for Aon Benfield in Bermuda. On the analytics side, Paul Hosni will join the firm’s West Palm Beach operations as a senior catastrophe analyst, transferring from Aon


n the back of burgeoning for complex risk transfer


demand solutions in


Benfield’s Dallas, Texas office. According to the Aon Benfield’s Reinsurance


Market Outlook—September 2015 report, overall reinsurance


demand in peak regions had


increased materially for the second consecutive year. This trend was particularly notable in Florida and other US coastal areas, given the attractive risk transfer margins offered in both the alternative and traditional markets. As a result, in 2015 a number of insurers


reduced their participation in government risk transfer programmes, such as the Florida Hurricane Catastrophe Fund, by utilising private reinsurance capacity. The Florida private insurance market has also


seen significant growth, and resulting increased private reinsurance demand, due to the positive Florida population and construction trends and due to the depopulation of policies from Citizens Property Insurance Corporation (Florida


Citizens)—a government entity that provides


insurance protection to Florida policyholders who are entitled to, but are unable to find, property insurance coverage in the private market. Keane said: “In line with the trend towards


increased reinsurance purchasing for Florida risk in the private markets, we are seeing strong local demand from clients both for transactional capabilities, and data and analytical solutions. “To meet this demand, we are increasing the


number of reinsurance brokers at our West Palm Beach office, as well as the number of analytics professionals. It is an exciting time in the state, and Aon is being proactive in expanding its Florida presence in order to meet future demand and capitalise on growth opportunities.” n


Citizens edges towards becoming an insurer of last resort T


he Florida Office of Insurance Regulation has approved the removal of up to 140,000


more personal residential policies and 2,500 commercial residential


polices from Citizens


Property Insurance Corporation. It represents the latest tranche of policies


to be transferred to the private sector from the state-run property insurance company in what Citizens’ spokesman Michael Peltier described as a “very successful” programme. Companies that benefit from the latest


divestiture include: Anchor Property & Casualty, Heritage Property & Casualty, Olympus Insurance and United Property & Casualty. Citizens’ personal lines and commercial lines


accounts are mostly non-coastal properties; the coastal account is coastal properties. The take-out periods are December 22, 2015 for personal residential impacting both personal lines and coastal account policies and December 15, 2015 for commercial residential. “Initially we were seeing private companies


16 | PCI TODAY | DAY 3: Tuesday October 27 2015


interested only in personal lines account (PLA) policies but more recently we have seen interest from private companies regarding coastal and mobile home policies,” Peltier added. Citizens’ job in taking the policies to the


private sector was made easier by the market’s appetite


for


alternative capital structures. “The availability of capital risk transfer has been


a significant driving force in our depopulation efforts. All insurance carriers are reaping the benefits of a competitive global reinsurance market. Competition from capital markets has driven down the cost of traditional reinsurance,” said Peltier. Following nine hurricane seasons with no major


storms, six years of rate adjustments under the statutory glide path and historically low reinsurance costs, six out of 10 Citizens personal lines policyholders are expected to see rate reductions in 2016. The companies that became Citizens were founded when many private


insurers went risk transfer and by utilising


27.10.15 TUESDAY


bankrupt or fled the market after Hurricane Andrew in 1992. It was originally intended to provide affordable policies for Floridians who couldn’t get cover anywhere else. Citizens is also under political pressure to


shrink because the more policies it carries, the greater the potential financial hit on everyone who has insurance. Under state law, Citizens can bill even non-Citizens policyholders if it runs out of cash to pay damage claims after a major storm. Floridian policyholders are still subject to


surcharges for damage in the 2004/05 hurricane season.


Despite a reduction of nearly 900,000


policies since late 2012, Citizens remains the largest property insurer in Florida with 601,213 personal and commercial policies in force as of September 4, 2015. At its peak, Citizens insured 1.5 million


Floridians. It’s now on its way to returning to being an insurer of last resort.” n


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