For years, a segment of the Florida property insurance industry had lobbied for more access to the lower-cost reinsurance offered by the state-sanctioned Florida Hurricane Catastrophe Fund—mainly through a lowered retention, or deductible, level.
Today, three years into Florida’s tort-reform era, things are changing.
Private reinsurance rates have fallen steadily. “Insurers renewing at April 1 achieved significant savings in all regions, building on the competitive conditions seen at January 1,” Aon said in its April renewal report.
And with the Florida Cat Fund’s rates set to rise this year, some insurers have noticed that, at least for some layers, private re prices are now equal to or lower than the state-sanctioned Cat Fund’s rates. Seven insurance carriers this year reduced their coverage level from the Cat Fund, from 90% to the statutorily required minimum 45% of losses from each covered event in excess of the insurer’s retention.
And that raises a fundamental question: Should that minimum level be even lower, allowing carriers to switch to more private re support. It’s a change that would require action from the Florida Legislature.
“There’s definitely appetite for exploring that,” said state Rep. Tom Fabricio, R-Miami Lakes, who attended the Florida Office of Insurance Regulation Summit, held Wednesday and today in Tallahassee.
Fabricio said decreases in private reinsurance prices, and the idea of restructuring the Cat Fund—unheard of just two years ago—is welcome. “It’s all good news, right? It shows that the reforms have worked.”
Florida Statute 215.555 allows carriers to purchase Cat Fund coverage at 90%, 70% and 45% of losses. Giving a fourth option with reduced coverage would give insurers more flexibility to seek more private reinsurance, carrier advocates said.
“That could be something to consider,” Florida Insurance Commissioner Michael Yaworsky said Wednesday, when asked if OIR would support such a plan. “I would want to see a deep, thoughtful discussion about it.”
Gina Wilson, the chief operating officer for the Cat Fund, declined to weigh in on whether the minimum coverage level should be reduced or allowed to fluctuate as private re prices change. She said only that there’s little the Fund can do about that without legislation.
Wilson did try to clear up some confusion about what’s happening with the Cat Fund’s proposed reinsurance rates this year. As first reported by Lisa Miller & Associates newsletter, The Fund recently released its proposed 2026 rates, based on a ratemaking formula presented April 2 to the Fund’s advisory council. The average rate for the 2026-2027 contract year will effectively rise 4.26%, due in part to the seven carriers reducing coverage this year.
When enough carriers reduce coverage, the burden is spread to others to help maintain the Fund’s $17 million reserve level. The average coverage level this year will be less than 82%, down from almost 85% for 2025.
But Wilson said that the 4.26% rate increase does not reflect individual companies’ coverage selections. “After factoring in the coverage selection changes, the overall industry rate change is projected to increase 0.43%,” she said.
The ratemaking report from Paragon, an Aon company, explained it the same way: “Some insurers chose to lower their coverage from 90% to 45%, effectively reducing their rate by half. After factoring in those coverage changes, the overall industry rate change is projected to increase 0.43%.”
That’s not bad, one Florida carrier executive said. But it does indicate how much private reinsurance rates online have dropped in recent years—as much as 15% this year for some carriers, suggesting that the Cat Fund may no longer be the best deal in town.
The Cat Fund’s 2026-2027 rates won’t be final until the State Board of Administration trustees, which oversee the fund, approve them at their June 2 meeting.
Related: Reinsurance Rates Continued Softening During April Renewals, Despite Iran War
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Carriers
Florida
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