Reinsurers dabbled in Florida quota share and lower layers at 6.1
Reinsurers may have dabbled in quota share and lower XoL layers of Florida nat cat funding towers to an increasing extent during the 6.1 treaty reinsurance renewals in an early sign that a key adjustment of the 2023 market reset could ease, key Florida brokers at global reinsurance brokerage Gallagher Re have claimed.
“There was less migration of capacity to higher layers, with more markets willing to support lower down in programs,” Gallagher Re Florida brokerage leaders Bryan Friendshuh and Adam Schwebach wrote in a market comment. They saw only “limited pressure” to further increase any retentions.
Primary cedents enjoyed their largest improvement on quotes for layers just above the coverage limit from the Florida Hurricane Catastrophe Fund (FHCF), a mandatory state-run market mechanism allowing cedents to choose a specified portion of coverage across a swathe of lower layers. Quotes on levels just above or adjacent to the FHCF were nonetheless said to be quite varied.
That pricing movement just above the FHCF “could have provided the incentive for reinsurers to consider additional support lower down,” the Gallagher Re brokers claimed.
Quota share also returned to the market now that primary rates on the up, Gallagher Re claimed.
“We have also seen a rebound in quota share capacity with cat coverage,” the brokers claimed, citing rate increases in the primary market and to legislative reforms enacted in Florida to date.
For the broader Florida renewal, Gallagher Re agrees in large part with the market consensus revealed to date: risk-adjusted rates on most programs ended either flat, or down by as much as even 10%.
Major retention increases on XoL treaty as well as reductions in aggregate programmes had been hallmarks of the 2023 property reinsurance market reset alongside the headline surge in rate. Continued reinsurance focus on more remote loss layers plus remote placements of heavy ILS issuance had also focused the rate moderation on those higher layers, the market consensus of the 1.1 and 4.1 2024 renewals had indicated.
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