Print this pageEmailPDFFlorida Homeowners Insurance Rates Not Excessive

For Immediate Release

Columbus, OH - December 6, 2006

Demotech, Inc. has concluded that Florida Homeowners insurance rates are not excessive.

The Basis of Demotech, Inc.'s Opinion

A review of the net after-tax profits of sixty-nine insurance companies that wrote Homeowners insurance has lead to the conclusion that Florida Homeowners insurance rates are not excessive. Each of the insurers operated in a single state.Twenty-two operated exclusively in Florida.Forty-seven operated exclusively in a state other than Florida.Each insurer wrote at least 70% of its direct written premium in the Homeowners insurance line of business.

An analysis of the net operating results was conducted over the periods 2001 to 2005, 2003 to 2005 and 2005.Net after tax income as a percentage of admitted assets, cash and invested assets and surplus as regards policyholders was reviewed.In each period, for each measurement, the net after-tax profit or loss of the insurers exclusively dependent on Florida Homeowners insurance lagged the net after-tax profit of insurers dependent on Homeowners insurance written in other states.If Florida had excessive Homeowners insurance rates, this analysis would have shown the opposite result.

The data indicated that single state Homeowners' insurance companies outside of Florida were profitable but that the net after-tax operating provision of the Florida insurers was a loss.The rate adequacy of Homeowners insurance is of significant importance to the carriers writing property insurance exposure and the reinsurers that provide catastrophe reinsurance.

The study is available for download here.

About Demotech, Inc.

Since 1985, Demotech, Inc., a Columbus, Ohio-based financial analysis and actuarial services firm, has provided responsive services to address actuarial and financial analysis issues, whether the challenges have been for a particular insurer or prevalent throughout the insurance industry. As the first company to have its rating process formally reviewed and accepted by Fannie Mae, Freddie Mac and HUD, Demotech has been leveling the playing field by offering Financial Stability Ratings® to insurers of all sizes.Demotech offers broad actuarial and industry experience through its services, which included pricing analysis, state filing assistance and Financial Stability Ratings®.

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Brett Gissel
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