A new report from Morningstar DBRS has suggested that, given Florida’s significant hurricane exposure, continued access to “affordable and readily available” reinsurance will remain critical to the market’s long-term stability and financial strength.
“Florida’s residential property insurance market has undergone a significant transformation after the severe disruption it experienced between 2020 and 2023,” the rating agency said in the recently published document.
According to Morningstar DBRS, that period was marked by numerous insurer insolvencies, rising reinsurance costs, excessive litigation, and a contraction in private insurance market capacity. These pressures reportedly contributed to substantial premium increases and a sharp rise in policies-in-force at Citizens Property Insurance Corporation, the state-backed insurer of last resort.
However, while Florida remains one of the most catastrophe-exposed insurance markets in the United States, the rating agency said conditions have improved considerably over the past two years, supporting a more stable operating environment and better insurance availability.
With private insurers regaining market share, reliance on Citizens is decreasing. This view is shared by Morningstar DBRS and many across our industry, as evidenced by the various reports referenced here.
According to the report, the sharp decline in policies-in-force and market share was driven by improving underwriting conditions, supported in part by favourable legislative reforms that reduced insurance fraud in Florida.
The rating agency continued, “Reinsurance market conditions have improved materially from the stressed environment experienced during the height of the Florida market disruption.
“Although reinsurance costs remain elevated relative to historical norms, pricing has stabilised, and capacity has increased. Improved conditions have strengthened insurers’ ability to manage catastrophe exposure, while also supporting the expansion of private-market capacity and the transfer of policies from Citizens.
“Given Florida’s significant hurricane exposure, continued access to affordable and readily available reinsurance will remain critical to the market’s long-term stability and financial strength.”
Elsewhere in the report, Morningstar DBRS also noted that the remainder of the 2026 hurricane season will still be an important test of recent market improvements.
Morningstar DBRS concluded, “With this year’s hurricane season now entering its peak months, activity has remained relatively subdued to date. On the surface, the favourable outlook for the hurricane season supports the potential for another profitable year for insurers in the state and continued capital accumulation. However, this should not be interpreted as a forecast for Florida landfall risk. Even a below-normal Atlantic hurricane season can produce significant insured loss if a major hurricane makes landfall in a densely populated and highly exposed area.
“We believe a major hurricane would provide an important stress test of whether recent improvements in pricing, reinsurance protection, and capitalisation are sustainable or have adequately absorbed such an event, without materially weakening Florida insurers’ capital positions or financial flexibility. Ultimately, private-market insurers’ ability to withstand such an event will be a key indicator of the durability of the market’s ongoing recovery.”
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