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Description of Reinsurance
Please note that our Reinsurance Handout provides more recent information regarding Security First's Reinsurance Program.
Effective: June 1, 2011 - May 31, 2013
Reinsurance is insurance for an insurance company's entire portfolio that can be purchased in various arrangements. Security First Insurance Company has one of the most comprehensive and robust reinsurance programs in the state, supported by billions of dollars in surplus. We want to be sure that after a series of catastrophic events, we're able to take care of our customers. Our top priority is protecting Florida families.
45% Quota Share Reinsurance
Quota share is the simplest type of reinsurance. A reinsurer agrees to reinsure a fixed proportion of every policy accepted by Security First Insurance, sharing in all losses. Security First Insurance purchased 45% Quota Share Reinsurance. This means that 45% of each dollar we receive in premiums is shared with quota share reinsurers who in turn cover 45% of claims and losses.
Net Catastrophe Excess of Loss (XOL) -
Single event protection
This type of reinsurance protects Security First Insurance against losses arising from a large catastrophe event where claims liability exceeds retention. Retention is the amount Security First Insurance must pay from its own funds in order to obtain reinsurance recoveries to pay claims. Think of retention as an insurance companys deductible. Our single event protection consists of $221.5M of catastrophe protection in excess of $5M retention applied to the 45% quota share. This means that if a catastrophic event occurs, Security First Insurance will need to pay only 55% of $5M to meet the retention needed to receive reinsurance recoveries of up to 55% of $91.5M. Quota share reinsurers will cover the remaining 45% of the retention and total loss. Protection of 100% of $130M is also available when a single events losses exceed $96.5M ($5M retention and $91.5M single event limit).
FHCF Layer
FHCF is a tax-exempt state trust fund that reimburses insurers for a portion of their hurricane losses. The FHCF Layer is mandatory coverage. FHCF provides an estimated 90% of $246.9M of loss coverage in excess of $96.5M retention. This means that a loss must reach $96.5M or higher before FHCF begins paying Security First Insurance for their losses. The additional layers of reinsurance purchased by Security First Insurance provide protection on the portion not covered by FHCF.
Temporary Increases in Coverage Limit (TICL) - Protection beyond FHCF
This coverage replaces the Temporary Increase in Coverage Limit (TICL) layer offered by the FHCF which serves to extend the FHCF coverage described above. Security First now purchases this coverage from the private reinsurance market. This reduces Security Firsts reliance on the ability of the FHCF to pay claims and prepares Security First for the anticipated reduction in reinsurance available from the FHCF in coming years. The TICL Replacement layer is 100% of $91.6M excess of the FHCF layer.
3rd and 4th Event Excess of Loss - Multiple event protection
This coverage is designed to reduce Security First Insurances retention (from $5M to $2M) in the event of multiple catastrophic losses in a single year. Retention for first and second events = 55% of $5M. Retention for third and fourth events = 55% of $2M if Quota Share reinsurance is available. Maximum retention without Quota Share reinsurance = 100% of $2M. This layer provides $63M in protection excess of $2M for third and fourth events. This protection is available when the loss for each of the first two events exceeds $65M.
Reinstatement Premium Protection - Retention protection
When the Catastrophe Excess of Loss reinsurance is depleted it must be restored. Security First Insurance purchases this additional reinsurance in advance to avoid having to pay full premium to replenish Catastrophe Excess of Loss reinsurance after a major catastrophe.
