Affordable and accessible reinsurance remains critical to Florida market’s stability: Morningstar DBRS

Given Florida’s significant exposure to hurricane risk, a new report from Morningstar DBRS has suggested that continued access to affordable and readily available reinsurance will remain critical to the market’s long-term stability and financial strength.

In a new report released by the agency, analysts noted that Florida’s residential property insurance market has recovered significantly from the disruption it experienced between 2020 and 2023, when a combination of insurer insolvencies, rising reinsurance costs, litigation pressures, and reduced private-market capacity drove a major increase in policies at Citizens Property Insurance Corporation.

The agency’s report also added that while Florida remains one of the most catastrophe-exposed insurance markets in the United States, market conditions over the past two years have improved considerably, which has ultimately helped support a more stable operating environment and better insurance availability

Data in Morningstar DBRS’ report shows that conditions have improved, with private insurers regaining market share, profitability strengthening, and Citizens’ policy count declining as business shifts back to the private market.

“Florida homeowners insurance premium rates increased by approximately 50% between 2020 and 2025, as insurers sought to restore profitability and address the elevated loss costs. Over the last two years, insurers have shown strong profitability, with cumulative net income improving to approximately $955 million in 2024 and reaching a decade high of $2.1 billion in 2025. Earnings were supported by robust underwriting performance, reflected in an 83% combined ratio in 2025, which generated approximately $1.86 billion in underwriting profit for the segment,” analysts explained.

Adding: “Although higher premiums have strengthened insurer earnings and supported the return of private market capacity, affordability remains a growing concern for residents across the state. Over the longer term, the market’s sustainability will depend heavily on the industry’s ability to generate adequate returns while maintaining coverage that remains accessible and reasonably affordable for Florida residents.”

In addition, the report also highlights how reinsurance market conditions in Florida have also drastically improved in recent years, following the stressed environment that it experienced during the height of the Florida market disruption.

“Although reinsurance costs remain elevated relative to historical norms, pricing has stabilized, 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.”

Morningstar DBRS also stressed that the remainder of the 2026 hurricane season will still be an important test of recent market improvements.

“With this year’s hurricane season now entering its peak months, activity has remained relatively subdued to date,” analysts said.

“On the surface, the favorable 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.”

Concluding: “We believe a major hurricane would provide an important stress test of whether recent improvements in pricing, reinsurance protection, and capitalization 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.”

Robert Gabriel, Vice President, Global Insurance & Pension Ratings, Morningstar DBRS, said: “Florida’s property insurance market has experienced a significant turnaround, supported by legislative reforms, stronger underwriting performance, improved reinsurance conditions, and the return of private-market capacity. While the recovery has strengthened market confidence, the next major hurricane will ultimately determine whether these improvements are sustainable.”