Binders market expects manageable impact from Florence
The London binders market may see a more limited impact from Hurricane Florence than what might have been due to the majority of the damage being concentrated in North Carolina.
While it is too early to provide a loss estimate for this segment, sources told this publication that if Florence had steered further south and struck South Carolina, it is likely the London binders market would have taken a bigger hit due to the greater penetration of the private flood market in the state.
North Carolina’s insurer of last resort is more active in providing coverage than its counterpart in South Carolina. However, there are a few large property binders backed by the London market which may be exposed to damage.
Storm surge and flooding – two of the main impacts to arise out of Florence – are usually excluded from the typical property binder, although there are some force-placed binders in the market that would cover such perils.
Large binders which have exposure to North Carolina include TapCo, which is brokered by Miller and brings more than $100mn in premium into London from across Florida, North Carolina and South Carolina.
Sources said another Miller-brokered binder is Johnson & Johnson, which again encompasses all three states but is smaller, at around $40mn of premium.
AmWins’ Seacoast Brokers binder, which targets coastal properties and resorts, is also estimated to generate around $40mn of premium. Its reach spans the whole of the US East Coast but it is headquartered in South Carolina.
All three of the above are said to exclude flood cover.
Meanwhile, Southern Cross, which is part of the CRC Group, provides excess flood cover for commercial accounts and personal lines, and is said to bring around $10mn of premium into London.
Major binders writers in London include Hiscox, Tokio Marine Kiln, MS Amlin, Brit and Axis, with XL Catlin, Channel, Apollo and Beazley also significant writers of the business. Most Lloyd's carriers participate in binders, with around 40 percent of the market's business generated via coverholder relationships.
Channel, Chubb and Brit were highlighted as carriers that do offer flood-specific coverage, while Hiscox also has its own flood product for US homeowners.
Some in the market speculated that those writing flood cover took advantage of rate increases after Harvey to grow their books and could have greater exposure this time round.