State-backed reinsurance may hit the Florida legislative agenda in 2024

A special legislative session of the Florida House this week saw any measures of particular relevance to the property insurance market taken off the agenda, while a measure that proposes another layer of reinsurance to support the Floridian carriers may now re-emerge for debate in 2024.

In the end, the only measures of note to the insurance industry in Florida that made it into and through the special session of the Florida House of Representatives this week, were one related to expanding the state’s home-hardening initiative and another giving tax breaks to those most affected by hurricane Idalia this year.

But these won’t have any significant ramifications in support of the property insurance market in Florida, which remains beset by challenges from losses recent and past, as well as higher reinsurance costs.

The additional $176 million made available for home hardening grants under the My Safe Florida Homes program will of course provide some benefits for policyholders though, in increasing the resilience of their homes, which may in time reduce their insurance costs.

But for the broader marketplace, measures that may now get to be debated at the legislative session in 2024 could provide more meaningful support.

In particular, a measure that envisaged an additional state-backed source of reinsurance is seen as something that could be key for lawmakers to agree on and implement before the next reinsurance renewals in June 2024.

In some corners, this state-backed reinsurance layer that would sit at the low-layers beneath the Florida Hurricane Catastrophe Fund, is seen as a key tool to help insurers navigate the hardened reinsurance market environment and potentially critical for next year, as it could enable insurers to focus their own reinsurance spend higher-up, while state-backed reinsurance furnishes the working layers.

That could take a significant amount of pressure off the Floridian carrier cohort next year, as the majority work towards a June 1st reinsurance renewal date.

This measure, to implement a further state-backed reinsurance layer, did not get onto the special session agenda this week, but lawmakers are keen to ensure it’s considered next year, we understand.

Florida’s insurance carriers are dealing with higher attachment points or their private market reinsurance, as well as reduced frequency and aggregate reinsurance protection.

Which has already turned some attention to higher layer purchases anyway, as this is where they can efficiently buy reinsurance that has benefits for their capital models.

An additional state-backed layer lower-down could help, ensuring the carriers can focus on buying robust reinsurance plans where they are affordable.

With the Officer of Insurance Regulation in Florida saying that roughly 50% of homeowners insurance premiums are due to reinsurance costs, any support in reinsurance buying may cascade down to benefit Floridians in terms of more affordable coverage, or at least lower rate increases.

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