Each year, primary property insurers writing business in Florida have to address unique reinsurance issues and face the challenge of structuring their programs to accommodate pricing and risk factors in view of the state's catastrophe exposure. This is done in the context of the political and regulatory realities that require a balancing of insurer solvency with market pricing and rating concerns. This year, both primary insurers and reinsurers have experienced additional challenges from another type of catastrophe — the global financial crisis.
Worldwide reinsurance broker Guy Carpenter and Company reports in its 2009 Reinsurance Market Review that, despite last year's costly natural and financial catastrophe losses, record earnings during 2006 and 2007 bolstered the balance sheets of many reinsurers at the start of 2008. In fact, all four major rating agencies maintained stable outlooks for the global reinsurance industry in their September 2008 reports. However, reinsurers have since suffered significant unrealized losses largely due to the capital market and financial catastrophe.
The global economic crisis, normal supply and demand factors, as well as recent catastrophe loss, have all served to increase the cost of Florida property reinsurance.
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