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Florida’s Reduced Collateral Rule for Reinsurers Is Only a First Step

With reduced collateral requirements, Florida has opened the door for companies to enter the reinsurance market and provide greatly needed relief to domestic insurers.

By Joel Mutnick, CPA | Updated on March 21, 2011

In the 30 years I’ve worked in Florida’s insurance arena, I have seen regulation and legislative changes implemented with the single purpose of assuring greater liquidity and decreased insolvency of regulated carriers. Yet literally hundreds of property and liability companies have liquidated for a litany of issues, including inadequate access to reinsurance.

As the ability to maintain adequate surplus becomes more difficult, an increasing number of insurers are being forced to decrease premium writings, take on less risk, and raise additional capital. As a result, the number of private carriers is decreasing.

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