Recent legislative reforms reshaping Florida’s risk environment have restored reinsurer confidence and drawn them back into the state’s market, according to mid-year renewal reports from brokers Aon and Gallagher Re.
“Florida entered the mid-year renewals on a much sounder footing following recent legal reforms, stronger building codes, better catastrophe modeling and disciplined underwriting actions that have restored confidence in the local insurance market,” said Aon in its report titled “Reinsurance Market Dynamics – Midyear 2025 Renewal.”
“Florida and non-loss affected U.S. regional insurers also experienced broadly positive renewals after several years of challenging conditions, as underlying rating actions and portfolio management, along with legislative reform in Florida, have restored reinsurer confidence,” Aon added. (See related article: Reinsurance Renewal Prices Moderate as Capacity Exceeds Cedent Demand: Brokers).
In recent years, numerous reinsurers have retreated from the Florida market due to insufficient pricing and inflated claims, largely driven by widespread abuse of assignment of benefits (AOB) agreements. These agreements—under which policyholders transfer their insurance claims rights to third parties—often led to elevated claim volumes and costs. However, recent legal reforms in Florida have significantly curtailed the use of such arrangements.
These legal reforms “have successfully reduced property litigated claims by a substantial margin,” creating a more predictable and stable environment, which has increased reinsurers’ confidence in the Florida market, said Gallagher Re in its report titled “1st View: Challenging the Status Quo.”
“This newfound confidence has led reinsurers to reassess their view of risk and adjust their strategies,” Gallagher Re said, noting that many reinsurers that “previously scaled back their operations or exited the market are now reconsidering their positions.”
“The improved risk environment has reinsurers eager to expand their portfolios and capture market share in a region that is now perceived as less volatile,” Gallagher Re added.
According to Aon, the approximately $41 billion in insured losses from Hurricanes Milton and Helene in 2024 demonstrated the effectiveness of Florida’s legislative reforms, reinforcing reinsurers’ confidence in the state’s property market.
“Claims from the two storms have performed in line with expectations and have not led to the late development of losses, known as loss creep, experienced following previous hurricanes, including Ian in 2022 and Irma in 2017,” Aon said.
Improved Insurer Health
Aon said the “orderly nature of this year’s mid-year renewals reflected the improved health of the underlying market.”
Gallagher Re noted that during the January 2025 renewals, both insurers and reinsurers benefited from the repricing of primary insurance portfolios.
Aon noted that ceding companies in Florida demonstrated marked improvement during the latest renewal cycle. “A composite of 50 Florida insurers analyzed by Aon reported net income of $402 million in Q1 2025, representing almost 50% of reported net income at year end 2024,” Aon said.
Aon reported that the composite’s median combined ratio improved significantly to 76.7% in Q1 2025, down from 92.9% at the end of 2024. Additionally, policyholder surplus rose by $476.9 million—a 6.8% increase from year-end 2024.
Rising Reinsurance Demand
Improved market conditions in Florida enabled cedents to secure sufficient reinsurance capacity to meet growing demand. Aon attributed this increased demand to a combination of inflation, updates to catastrophe models, and the ongoing depopulation of Citizens, the state’s insurer of last resort for windstorm coverage.
“The depopulation program transferred more than 428,000 Citizens policies to the private insurance market in 2024, generating additional limit demand from insurers,” commented Aon. “As of April 30, 2025, Citizens had close to 809,000 policies in force, down from a peak of 1.4 million policies in September 2023.”
Aon reported that during the mid-year renewals, reinsurance capacity remained more than adequate to absorb an almost 10% increase in global demand for property catastrophe coverage, fueled largely by U.S. insurers and the ongoing depopulation of Citizens, Florida’s residual market insurer.
Florida Renewal Pricing and Policies
Both Aon and Gallagher reported that reinsurers responded to strong insurer performance in the Florida market with more favorable pricing, terms, and conditions.
Aon noted that while pricing generally softened during the mid-year renewals, there was considerable variation in outcomes as reinsurers assessed cedents individually, factoring in their loss histories and performance. These renewals—taking place primarily on June 1 and July 1—are critical for U.S. national insurers, Florida markets, and insurers in Latin America, Australia, and New Zealand.
Conditions at the mid-year renewals were broadly favorable, Aon added, “with moderate price reductions and more flexible terms.”
“Overall, risk-adjusted rate reductions were in the high single digits on average, although pricing varied depending on loss experience. Outcomes also reflected renewal strategies, with insurers who engaged the market early were able to achieve better terms and pricing,” Aon continued.
Aon further noted that reinsurers showed greater willingness to adjust program structures, offering options such as lower attachment points, reduced retention levels, and expanded coverage.
“In a bid to meet premium growth targets, reinsurers were willing to move down programs, increasing competition for lower layers. As a result, supply at the top of programs tightened,” Aon said.
Gallagher Re shared further insights regarding the June 1 renewals focused on Florida, including:
- During the marketing phase, reinsurers signaled a desire to grow with some re-entering the market after previous cutbacks.
- Quotes were generally risk-adjusted flat, though some markets that had previously leaned furthest into the hard market sought additional increases.
- More reinsurers were willing to write across the board, hoping to maintain (or grow) their market share on programs. “However, in some instances, this capacity was not taken up on bottom layers as cedents gave preference to incumbents who paid a loss.” (While other reinsurers, seeking market share, offered to underwrite those lower layers, cedents opted to keep those layers with the incumbents that had paid a loss in the prior year, a Gallagher representative explained.)
- Programs were often oversubscribed, allowing for the removal of certain unfavorable terms and conditions.
- There was an overall risk-adjusted price decrease of -10.7% with decreases achieved across all layers. The average decrease on low layers was -9%, mid layers dropped by -12%, and upper layers by as -20%.
- Strategic buydown layers were available, enabling clients to reduce retentions year-over-year in Florida.
