Given that early forecasts suggest a slightly below-average Atlantic hurricane season for 2026, Fitch Ratings has indicated that U.S. property and casualty (P&C) re/insurers are well positioned to absorb losses from a large event, with the agency noting that Florida remains a key focus, even though market conditions have improved for protection buyers heading into the season.
“While forecasts contain elements of speculation, baseline outlooks assume that current El Niñosouthern oscillation (ENSO)-neutral conditions are likely to transition to El Niño over the next several months. Sea surface temperatures in the western tropical Atlantic are warmer than normal, but are slightly cooler than normal in the eastern and central tropical Atlantic,” Fitch said in a new report.
The agency notes that a combination of legislative reform, increased private-market capacity and improved reinsurance conditions have helped strengthen Florida’s property insurance market since 2023.
Fitch explained that Florida’s state-sponsored insurer of last resort, Citizens Property Insurance Corporation, is directly affected by the overall level of insurance availability in the private market.
Citizens’ policies in force peaked at about 1.4 million in 2023 but then fell to roughly 295,000 by April 2026 as private carriers coverage expanded. Nevertheless, it is anticipated that any further reductions will occur at a slower pace as take-out opportunities diminish.
Additionally, Fitch added that insurers operating solely in Florida may be more susceptible than their larger national counterparts during a year of significant catastrophe, as their capital reserves are typically less robust.
The agency also observed that heading into the June/July 2026 reinsurance renewals, market conditions appear favourable for Florida cedents, supported by expanded capacity from both traditional and insurance-linked securities (ILS) markets, including strong catastrophe bond issuance and broader third-party capital.
Crucially, these softening market conditions and increased capacity are not isolated to Florida; similar dynamics are benefiting reinsurance buyers with Nationwide U.S. programs, who are seeing comparable improvements in availability and terms too.
“Early indications suggest risk-adjusted pricing is down by roughly 15%–20% across many layers, reflecting strong reinsurer balance sheets, growing alternative capital and improved confidence in the Florida market following legal reforms,” Fitch said.
Adding: “In many cases, cedants are using reinsurance savings to purchase additional protections. Terms and conditions have also become more flexible, with reinsurers showing greater willingness to deploy capacity across programs.”
Unlike the more constrained conditions seen in prior years, protection in 2026 appears to be increasingly available across more of the tower, with improved access seen in some lower layers and continued competitive pressure at higher attachments supported by alternative capital.
Even with the added capacity, the agency stated that it expects the reinsurance market to maintain its discipline and support rate adequacy, as catastrophe risk remains high amongst climate change concerns.
While there have been some reports of certain terms relaxing at these renewals, in the main the structures are holding and all-important attachment points are not reducing without buyers having to pay commensurately for that, it seems.
“Reinsurance demand is also increasing at the 2026 midyear renewals, driven by exposure growth, rising insured values, continued Citizens depopulation, new-carrier formation and shifting FHCF attachment points that are increasing demand for protection below the FHCF layer. Florida insurers are expected to seek an additional $5 billion to $7 billion of reinsurance at midyear, with some of that demand concentrated below the FHCF layer,” Fitch noted.
“Looking ahead, market conditions appear likely to remain supportive in the near term, although pricing and capacity could become more volatile following a major catastrophe event,” the agency continued.
Overall, the agency concludes that improved market conditions and strong industry capital leave insurers better positioned for the 2026 season, but stresses that loss outcomes will still depend on storm landfall and severity.
