Fitch: Premium rate hikes better position US P&C sector for hurricane season

By Isha Marathe

June 2 - (The Insurer) - U.S. P&C premium rate increases, surplus growth and legislative changes in Florida will better position (re)insurers to withstand the 2025 hurricane season and other potentially extreme catastrophic losses, Fitch Ratings has said.

Storm activity during the 2025 Atlantic hurricane season is forecast to be slightly above average.

The 2024 Atlantic hurricane season produced 18 named storms and 11 hurricanes, five of which reached Category 3 or higher.

Fitch said that the capital strength of (re)insurers can absorb near-term large insured losses from an individual hurricane or other catastrophic event, but a confluence of large events in a short period may lead to capital reductions and rating pressure.

However, industry policyholders’ surplus grew by 6.5% in 2024 to $1.1 trillion. Fitch forecast that industry surplus will continue to show modest growth in 2025.

Fitch expects pricing to remain adequate at the June and July 2025 reinsurance renewals, although property has continued to soften, with loss-free business down 10% or more.

FLORIDA

Weakened capital positions at individual Florida specialists could be challenged in the event of a significant catastrophe year, Fitch said.

In 2024, reinsurers demonstrated the resilience of their balance sheets, as capital remained robust despite significant catastrophe events in recent years.

Come the 2025 hurricane season, Fitch said reinsurers will continue to maintain "very strong" capitalisation as they manage capital while balancing capacity deployment for growth opportunities with the return of capital to shareholders.

In addition, Florida's tort reform is showing a positive effect on the P&C market, the report found.

Since 2019, Florida has implemented legislative and regulatory tort reforms that have stabilised rapidly growing loss costs and litigation rates on claims that had exceeded national averages, Fitch said. Initial indications are showing benefits of the reforms.

However, broader return of capacity from highly rated insurance carriers to the state has been limited.

Policies in force at Citizens Property Insurance Corporation, Florida’s state-sponsored insurer of last resort, peaked in 2023 at about 1.4 million, but had fallen to 813, 000 as of May 2025.

Fitch expects Citizens' policy count will continue to decline as additional carriers show interest in policy take-outs.

Reinsurance demand increased at the mid-year 2025 renewals following a very active 2024 hurricane season, with hurricanes Milton and Helene both making landfall in Florida, Fitch said.

In 2025, Florida property writers want more protection, purchasing additional limit at higher levels as lower layers continue to be too expensive to be economical, the report found.