All articles tagged with #reinsurance
The Trump administration announced a rolling $20 billion reinsurance program via the U.S. International Development Finance Corporation to insure losses on oil tankers and other maritime traffic through the Strait of Hormuz, aiming to restart flows amid Iran-related tensions; officials say the plan could help move crude, LNG, and other cargoes, as oil prices jumped, though security concerns remain the main hurdle for ships.
Reinsurers have increased profits by reducing coverage and raising premiums amid rising natural disasters and climate change, with industry forecasts indicating continued strong profitability until at least 2027 despite lower reinsurance prices and increased investment from private capital and hedge funds.
Home insurance rates in Florida are already four times the national average and are expected to increase further, with Insurify projecting a 7% rise in 2024. The state faces an "explosive" hurricane season, potentially breaking the record for named storms. Severe weather-prone states like Florida, Louisiana, and Texas are vulnerable to rate hikes, with Florida homeowners paying the highest average rate of $10,996. The state's insurance crisis is exacerbated by reinsurance challenges, insurance fraud, and legal system abuse. Efforts by the Florida Legislature and Governor DeSantis aim to address rising costs, but homeowners are advised to prepare for potential damage and research ways to protect their homes.
More than 70,000 State Farm policyholders in California were informed that their insurance policies would not be renewed, leaving them scrambling for alternatives. The decision comes amid rising home insurance rates and a retreat by major insurers from the state, citing financial risk and limitations of working within decades-old insurance regulations. This trend is pushing more people onto the California FAIR Plan, the insurer of last resort, which is starting to show signs of strain. The issue of passing through reinsurance costs to policyholders is a major sticking point, with potential federal legislation and state policies being considered to address the situation.
Florida's home insurance market has become dysfunctional due to surging property insurance costs, with average premiums costing homeowners $6,000 a year, more than triple the national average. Factors driving the insurance challenge include more frequent and costly natural disasters, skyrocketing reinsurance prices, and a litigation-friendly environment. Florida's response includes passing Senate Bill 2A, aiming to discourage needless lawsuits and restrict assignment of benefits, but the long-term impact remains uncertain, with other disaster-prone regions watching closely.
Swiss Re, the insurance giant, reported a 580% increase in full-year profit, reaching $3.2 billion, and proposed a 6% dividend increase, attributing the growth to a more favorable market environment. CEO Christian Mumenthaler expressed optimism about the company's outlook but warned that the impact of climate change would soon be felt by consumers, leading to increased risks and costs. He emphasized the need for fair pricing to reflect these heightened risks, as shares of Swiss Re dipped by 2.1%.
Intense thunderstorms in the U.S. during the first half of 2023 resulted in a record-breaking $34 billion in insured losses, according to a Swiss Re report. Texas was the most affected state, with over $7.2 billion in insurance losses. Globally, severe thunderstorms accounted for nearly 70% of insured natural catastrophe losses in the same period. The increase in insured losses is attributed to a warming climate and rapid urbanization. Overall, insured losses from natural catastrophes in the first half of 2023 reached $50 billion, surpassing the 10-year average by 42%.
State Farm, the largest car and home insurer in the US, has announced that it will no longer sell new home insurance policies in California due to the high risk of catastrophic wildfires and rapidly rising inflation costs. Existing policyholders will not be affected, and the company will continue to sell car insurance in the state. The decision was made to improve the company's financial strength, and State Farm will continue to evaluate its approach based on changing market conditions.
MetLife has signed a $19.2 billion reinsurance deal with Global Atlantic and increased its stock buyback program to $4 billion. The company expects the transaction to positively impact several of its key financial metrics. The deal is likely to close in the second half of 2023.