The insurance policies picked up by Slide characterize $272 million in annual premium. This brings Slide’s whole in-force premium worth to $560 million, the enterprise reported. The agency has additionally purchased UPC’s mental property (IP) and a dataset with an attributed whole insured worth of $1 trillion.
“I feel quite strongly that a large portion of the Florida insurance market is insolvent,” Lucas stated. “So, you get an actual benefit while you’re entering into a distinct route and being contrarian.
“While everyone else is de-risking and shrinking their portfolio or exiting the state, there’s an opportunity for a new carrier to come in without any of the legacy problems plaguing the market.”
Why did Slide enter the Florida insurance coverage market?
Slide, which is rated as A (distinctive) by Demotech, claims to be the primary Florida insurer to open for brand new enterprise within the state in 2023. It did so with a clear stability sheet and plenty of capital.
Slide was designed to come back into the risky Florida market, Lucas instructed Insurance Business. Two years in the past, he anticipated market backside would are available a 12 months’s time. But Hurricane Ian accelerated the downward spiral.
Slide rode the wave into the state, unencumbered by legacy issues resembling open lawsuits and adversarial growth, Lucas stated.
“Our rates are where they need to be to turn an underwriting profit. Our timing was prescient. Slide was designed to come into a volatile market, on the bet that at some point, it would bottom out,” he stated. “Coupled with the reform that we got that back in December, it worked out perfectly for us.”
Lucas isn’t any stranger to Florida’s insurance coverage panorama, because the founder and CEO of Heritage, a property and casualty insurer, between 2012 and 2020.
Despite the state’s insurance coverage woes, he stated he believes good operators can navigate the Florida market.
“You can absolutely out-manoeuvre the market if you stay ahead of the trends and make great decisions. You can do well, especially when there’s widescale reform to stops all the abuses that caused the problems to begin with,” Lucas stated.
“That was our bet. And that bet has paid off.”
How will the December laws change Florida’s insurance coverage market?
In a information launch, Lucas had stated that sweeping reforms in Florida had given Slide Insurance confidence to broaden its presence within the state.
Last December, Florida lawmakers met for a particular session to sort out the state’s property insurance coverage disaster. A slew of insurer insolvencies in latest months plunged the market into chaos following the devastating affect of Hurricane Ian.
The session produced a bundle of reforms geared toward stabilizing the market, selling competitors, and growing shopper alternative. While the insurance coverage trade lauded the adjustments, observers warned that enhancements had been nonetheless a couple of years away.
The reforms can be “incrementally positive” for incumbents alongside the way in which, Lucas stated. But he additionally doesn’t see the top of insolvencies simply but.
“Policyholders are going to start seeing changes a lot faster than the legacy carriers,” he stated. “That’s as a result of the carriers nonetheless have an adversarial growth tail of 5 years that they should work their manner by way of.
“I’m not calling a bottom to Florida insolvencies. Rates in Florida will continue to escalate at pretty high clips for the next three to five years, despite the reforms, as companies work through their adverse development tail.”
Will there be elevated competitors in Florida property insurance coverage market?
Given the alternatives accessible for brand new entrants to Florida’s market, is Slide Insurance involved about elevated competitors?
“I think you’re going see some new companies coming into the market, but it’s unlikely to happen in the near term,” stated Lucas.
New insurers will want a variety of capital to remain float for the primary two to 3 years of enterprise. But capital is hard to come back by today, the CEO argued.
“I can tell you no new capital is coming into the incumbents. Investors think it’s too high of a risk with adverse development,” he stated.
“It’s going to be challenging for people to raise money come into this market and not have a way to generate a positive return for shareholders for a few years.”
It will take roughly two or three for the market to mature and for reinsurance charges to stabilize, creating a neater entry for competitors, Lucas predicted.
In distinction, Slide Insurance had deliberate to “come in and lose money for the first two years,” although it discovered lucky timing with its two latest acquisitions. Aside from UPC, Slide additionally scooped up owners’ insurance policies from St Johns Insurance, which was positioned into receivership in March 2022.
“We absolutely want to take on additional market share over the next couple of years, but we’re going to do it in a smart way,” Lucas stated.
“We’re not going to take bad underwriting risks or outsized risks to our capital base, and so the growth will be meaningful but measured.”
Do you could have ideas about Slide Insurance and Florida’s insurance coverage market? Share them within the feedback part.