Expert Says Fla. Re Rates Are Down Sharply

Property reinsurance rates dipped 30 percent to 50 percent in Florida in the recent renewal season, according to a leading industry expert.

U.S. Re Corp. reinsurance broker Brian McGuire told a Bank of America equity research conference call Friday that the figure does not take into account the fact that reinsurers are offering coverage this year with a free reinstatement, and thus, insurers are not purchasing reinstatement coverage.

"Excluding the impact of free reinstatement, rates are down 5 percent for coverage below the Florida Hurricane Catastrophe Fund and down 10 percent for coverage of the 10 percent of losses above the attachment that the fund does not cover," he said in an account provided by BofA Securities. The media was not invited on the call.

Mr. McGuire said casualty reinsurance rates have held steady in general liability lines, while they are more competitive in workers' compensation and casualty clash covers.

The Reinsurance Association of American describes clash cover as policies intended to protect the ceding companies against accumulations of loss arising from multiple lines of business for one insured involved in one loss occurrence.

The broker also said demand for commercial insurance remains strong and rates are firmer than homeowners' reinsurance rates.

"Terms and conditions have not changed significantly since 2006," Mr. McGuire said.