Demotech President: Companies are Considered Individually Based on Reinsurance Program Presented
May 13, 2010
Demotech, Inc. President Joe Petrelli issued the following statement today, May 13, 2010:
“I have been advised that the recent positions that Demotech has taken in specific situations are being interpreted as broad sweeping changes imposing reinsurance requirements. To the contrary, be advised that when a carrier answers our reinsurance data request, Demotech provides each carrier with an opportunity to summarize and present the quantitative and qualitative considerations that impacted their decision to propose the reinsurance program that they submitted to us.
“In those situations where Demotech concludes that the qualitative and quantitative information submitted to date is inconclusive or insufficient, we will request any other specific considerations related to the company and its reinsurance proposal. If the carrier does not provide a response that reflects acceptable alternatives to reinsurance, such as an immediate capital infusion, financial commitment from a substantial third party or other evidence to support their proposed reinsurance program, having exhausted all options and given the carrier an opportunity to address our concerns, we may default to requiring a conservative reinsurance program. Financially stable, communicative carriers should be able to avoid the imposition of a specific reinsurance requirement by utilizing the multiple communications between themselves and Demotech to adequately explain their position.
“In sum, we have specifically responded to individual companies based upon the reinsurance information submitted to us and our consideration of each individual company’s overall financial stability. Furthermore, I believe that the informational memorandum issued by the State of Florida Office of Insurance Regulation and the discussion document issued by Demotech, while separate and independent, are consistent in their expectations. As it has been since June 1996, Demotech personnel are available to explain Demotech’s position.”
Note: The referenced Florida Office of Insurance Regulation Informational Bulletin OIR-10-O1M and the Demotech discussion document are attached for review.
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