An article in the Wall Street Journal suggests that Florida’s property insurance market is inherently flawed and financially shaky, under the review of a smaller ratings company.  It cites the 12 insurance company insolvencies between 2019 and 2023 in a market painted as over-reliant on reinsurance. Former Florida Deputy Insurance Commissioner Lisa Miller sits down with Demotech President & CEO Joe Petrelli and former Florida Insurance Commissioner Kevin McCarty to explain the unique nature of Florida’s market, how financial ratings of insurance companies are formulated, the critical role of reinsurance, the confusion between rate and premium, and the real reasons behind those insolvencies.Show Notes  (For full Show Notes, visit https://lisamillerassociates.com/episode-59-how-secure-is-floridas-property-insurance-market/) Host Miller discussed the evolution of Florida's property insurance market following 1992’s Hurricane Andrew, highlighting the departure of large insurers and the rise of smaller, regional companies that still make up most of today’s market.  Miller, an employee of the then Department of Insurance, said “large legacy insurance companies left our state altogether, saying the risk exposure was just too great.  Likewise, after 2017’s Hurricane Irma, other companies stopped writing new policies.”  Florida’s Unique MarketMiller noted that the state’s property insurance market has adapted over the ensuing 33 years to continue to provide needed insurance “for what's become one of the riskiest places on earth to insure.  It has unique challenges that have prompted innovative solutions.”  One of those solutions was Demotech, a Columbus, Ohio-based actuarial firm that provided ratings for Florida’s new regional companies when other ratings companies would not.  Demotech’s RoleDemotech President Joe Petrelli said its specialty in reviewing and assigning Financial Stability Ratings (FSRs) for independent regional carriers was born of the need of federal mortgage backers Fannie Mae and Freddie Mac in 1988, who together own or insure a substantial number of home mortgages nationwide.  They vetted Demotech’s ratings methodology and today, the firm provides FSRs for most of the 55 Florida based property insurance companies, including some of the recent 14 carriers who’ve entered the market since the Florida Legislature’s 2022-2023 litigation and consumer protection reforms.  Now in its 40th year, Demotech rates insurance companies across the nation that write billions of dollars of premiums.“We look at carriers independent of their size.  We look at them based on their business model, the execution of that business model, and the complementary nature of their reinsurance program,” said Petrelli.  “So I think that's what makes us unique.  I think when we look at catastrophe prone areas, whether it's wind, fire, tornado, hail, earthquake, what we're looking at is, does your reinsurance program give you the claims paying ability that you need?”  (For full Show Notes, visit https://lisamillerassociates.com/episode-59-how-secure-is-floridas-property-insurance-market/)