Aon: Florida carriers secure average high single digit rate cuts in 'broadly favorable' renewal

By Chris Munro

June 30 - (The Insurer) - Floridian insurers ended the midyear renewals having secured risk-adjusted rate reductions in the high single digits on average as reinsurers entered discussions with restored confidence in the Sunshine State, according to Aon.

This year’s “orderly” renewal reflected the underlying Florida market’s improved health, the broker said in its newly published Reinsurance Market Dynamics; Midyear 2025 Renewal report, with the sector having stabilized after several challenging years following legislative reforms and premium increases on the original business.

Stronger building codes, better catastrophe modeling and disciplined underwriting actions further boosted reinsurers’ confidence in Florida.

“Having stabilized at renewals in 2024, conditions at the midyear renewals were broadly favorable, with moderate price reductions and more flexible terms,” Aon said.

While risk-adjusted rate reductions were in the high single digits on average overall, individual carriers’ loss experience affected the actual pricing on each renewal.

“Outcomes also reflected renewal strategies, with insurers who engaged the market early were able to achieve better terms and pricing,” the broker said.

WHAT DROVE THE INCREASED DEMAND?

A combination of factors meant Florida insurers’ demand for reinsurance capacity increased at the midyear renewals.

Aon said inflation, catastrophe model changes and further depopulation of Florida’s windstorm insurer of last resort Citizens pushed demand higher.

Last year, 428,000 Citizens policies were transferred to the private insurance market via the depopulation program, with those Florida insurers that assumed them looking to secure additional reinsurance coverage in response.

“The regulatory environment is also improving, which is encouraging existing reinsurers to take on more risk as well as new entrants,” Aon said.

MORE THAN ADEQUATE CAPACITY

The increased demand for reinsurance capacity from Florida’s property insurers was met with heightened appetite from traditional reinsurers, who sought to deploy more capital in the Sunshine State.

Competition from reinsurers intensified further from ILS markets who targeted middle layers of catastrophe programs, Aon said.

To meet their premium growth targets, Aon said reinsurers were willing to move down programs, and that caused competition for lower layers to intensify.

That also meant supply at the top of programs tightened, while Aon also highlighted that capacity was “notably constrained” for reinsurance premium protection cover in Florida.

“With a growing appetite for Florida business, reinsurers were more flexible at the midyear renewals,” Aon said.

“Terms and conditions were consistent across the market and reinsurers were more willing to consider changes to program structures, including lower attachment points and retention levels, as well as broader coverage,” the broker added.

RESTORED CONFIDENCE

Reinsurers entered the renewal with renewed confidence in Florida, Aon said.

The legislative reforms introduced in Florida in recent years to try and tackle legal system abuse within the state’s property insurance market were put to the test last year by Hurricane Milton and Hurricane Helene, which generated total insured losses of approximately $41 billion.

“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.

“The market’s performance following Milton and Helene gave reinsurers confidence in the changing fortunes for Florida’s property insurance market going forward,” it added.