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Cat bonds further exposed by rising Florida property values

Cat modelling firm Risk Management Solutions (RMS) has said the recent increases in Florida’s property values has exposed some cat bonds to a higher risk.

RMS said it anticipates there will be increases in its Industry Exposure Database which may impact the measured risk for catastrophe bonds that rely on industry loss estimates (such as the PCS index). 

It added: “While RMS has not yet finalised its estimation of the magnitude of the change, it has signalled that it expects Florida residential to exhibit the most significant increase in risk. This view is driven primarily by increases in the RS Means Construction Cost Index of approximately 15 percent over the past several years, plus a smaller increase reflecting recent growth rates in exposures reported for the admitted Florida residential market.” 

RMS intends to release its estimates of the magnitude of the increase in risk during the week of 30 April.

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