30 June 2023Analysis

Aon: captives played key role in Florida renewals

Captives played a ‘meaningful role’ in the mid-year renewals in Florida, according to a new report by Aon.

The report is entitled ‘Reinsurance market dynamic June and July 2023’ and provides a comprehensive assessment of key market trends in the context of the June and July 2023 reinsurance renewals period, as well as commentary on global reinsurer capital, alternative capital and the macroeconomic environment offer insights on the potential direction of the global (re)insurance industry and future renewals.

This report is heavily focused on Australia and New Zealand, and the United States, especially the state of Florida, as those regions renew a large portion of their business in the June and July renewals period.

According to the report captive reinsurers continued to play a meaningful role at the mid-year renewal, alleviating pressure on the lowest layers of insurer programs. With relatively low frequency of catastrophe losses in Florida, low layer captive deals that generated profits in 2022 were rolled into 2023, providing useful capacity.

The report also said that: “While still early days, there are encouraging signs of future growth opportunities for insurers and reinsurers in Florida. As tort reform leads to lower overall loss costs, insurance and reinsurance capital is likely to flow back into the market. Florida’s windstorm insurer of last resort, Citizens Property Insurance Corporation, continues to grow, creating opportunities for profitable depopulation.”