Larger carriers shunning coastal exposures: Stonybrook

Larger national carriers are shying away from coastal exposures, particularly in Florida and New England, where smaller, regionally focused carriers have higher market shares, according to a white paper by Stonybrook on the coastal homeowners market.

Despite this, the coastal homeowners market got off to a good start in 2021, with Porch’s acquisition of Homeowners of America in Texas in January indicating it could be an active year.

It follows an extremely busy year in 2020, which saw five coastal M&A deals, four of them involving Florida-based acquisitions.

Stonybrook noted that major storm losses have historically impacted Florida to a disproportionate extent, with nine out of 28 storms, or 32 percent, affecting that state, compared to 29 percent in Texas and 11 percent in Louisiana - a state which saw a record of five named storm landfalls in 2020.

“The Florida carriers are particularly challenged as regulators and rating agencies have tightened their standards following several years of poor results,” the white paper added.

In the white paper, Stonybrook predicted that low-tax states such as Florida, Texas and New Hampshire will see increased demand for reinsurance as their populations and house prices rise.