Floridian insurers purchased more reinsurance in 2023 but cost of coverage rose 27%: OIR

The Florida Office of Insurance Regulation (OIR) has reported a year-on-year rise in the amount of reinsurance coverage purchased by domestic Florida insurers in 2023, as the cost of protection rose for buyers amid the hardening market landscape.

Based on findings from the ARDC for the 2023-2024 year, the amount of reinsurance coverage purchased by insurers in 2023 increased by an average of 11% from 2022.

However, the latest Property Insurance Stability Report from the OIR also reveals that the risk-adjusted cost of reinsurance increased by 27% from 2022 figures.

Florida is the most catastrophe-prone region in the US, and to offset potential losses from severe storms and hurricanes, domestic Floridian insurers heavily rely on the global reinsurance market.

As a result, the domestic Florida property insurance market is sensitive to hardening reinsurance market conditions.

“When the supply of reinsurance is readily available and affordable, the capacity of domestic property insurers to write and retain business is enhanced, and the premium impact to consumers is modest,” says the OIR.

OIR conducts the ARDC to assess insurers’ financial viability in covering catastrophic losses concerning their catastrophic reinsurance programs, which consist of three stages.

The first phase is the collection of estimates of what insurers plan to purchase for reinsurance, followed by the collection of the actual amount of reinsurance purchased by insurers, and then the collection of information on the reinsurers utilised.

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