Gallagher Re: Florida reforms drive market softening amid quieter hurricane outlook

Gallagher Re observed that Florida’s 2026 reinsurance renewals have been shaped by abundant capacity, legislative reforms and increased use of catastrophe bonds, against the backdrop of a below-normal Atlantic hurricane season forecast.

Speaking on a webinar, “Atlantic Hurricane Season Outlook and Natural Catastrophe Update”, Adam Schwebach, head of North America property at Gallagher Re, said recent Florida reforms had transformed the market environment.

“The reforms that were achieved in 2022 have had a monstrous impact on the overall insurance and reinsurance market in the state of Florida,” Schwebach said.

He added: “This was a huge part of conversations with reinsurers this year, that they could have the information and really the resolve to price according to a new environment in the state.”

Schwebach said data from Gallagher Re’s Florida placements, within two weeks before the webinar, showed consistent risk-adjusted rate reductions across programmes.

“We saw that most reinsurers were quoting in a range of minus five to 10%,” he said.

The final outcome across Gallagher Re’s portfolio was even stronger for buyers.

He said pricing was “on average across our portfolio [rates were] minus 22.8%, with a pretty tight range of off 20 to 25% across the board for all of our clients in all layers.”

Unlike some softening markets, where reductions are concentrated at the top of programmes, Schwebach said Florida saw broad-based reductions across towers.

“We saw a very consistent softening in that 20 to 25% range across reinsurance towers from top to bottom, which was again a sign of abundant capacity,” he said.

Despite a quieter seasonal forecast, Schwebach said buyers did not use price savings simply to reduce spend.

Instead, many used softer conditions to improve coverage.

“Our clients and reinsurance buyers within the state used the softening market to buy improved coverage in 2026,” he said.

He added: “Companies are also still cognizant that 2004 and 2005 can happen in multiple landfall.”

Schwebach said buyers returned to the market “with some price savings” and used those savings to purchase aggregate, multiple-event and drop-down protection.

The catastrophe bond market also played a larger role in Florida risk transfer, with Schwebach describing insurance linked securities (ILS) and traditional reinsurance as both central to the renewal outcome.

“Cat bonds have very much become a standard practice in reinsurance coverages in the state of Florida,” he said.

He noted that Florida cat bond issuance stood at about $4.3bn in 2026, compared with $4.6bn in 2025, while stressing that much of the protection placed in prior years remains on programmes because it is multi-year coverage.

Schwebach said cat bond investors also moved into somewhat lower layers of programmes.

In 2026, about 20% of the limit Gallagher Re placed participated alongside the Florida Hurricane Catastrophe Fund, he said.

He also pointed to the growth of cascading and sideways protection.

“In 2026, nearly all of the limit that’s being placed has some form of cascading, or is providing some form of aggregate or sideways coverage,” Schwebach said.

The market backdrop was supported by a relatively benign first half for global insured catastrophe losses.

Steve Bowen, chief science officer at Gallagher Re, said global insured losses were running at roughly $33bn to $35bn in early June.

“If you’re taking that out to an H1 perspective, we are running about 40-45% below normal,” Bowen said.

He added that the US severe convective storm season had been active in absolute terms but lighter than the recent elevated years that have driven large losses.

“As of today, we’re roughly $20bn, and that is a big number,” Bowen said. “If we’re talking in the context of pre-2020, that would actually be one of the most expensive starts of the year for this peril that we’ve seen.”

The Atlantic hurricane outlook also suggested a less active year.

Phil Klotzbach, senior research scientist in the department of atmospheric science at Colorado State University, said CSU’s June update forecast 11 named storms, five hurricanes and two major hurricanes.

“In comparison, an average season has about 14 storms, seven hurricanes and three major hurricanes,” Klotzbach said.

He stressed that seasonal activity and landfall loss are not the same thing.

“If we predict five hurricanes, and we get five, we can’t say exactly where those storms are going to go,” he said.

Mona Hemmati, global tropical cyclone peril lead at Gallagher Re, made a similar point from an underwriting perspective, warning that even El Niño years can produce costly outliers.

“We cannot treat every El Niño as a safe harbour for underwriting,” Hemmati said.

“We basically need to account for all of this volatility that can exist across the season to be able to manage the risk properly.”

For reinsurance buyers, the result is a market where lower expected activity and lower recent losses have created more favourable renewal conditions, but not complacency.

Schwebach said the 2026 Florida outcome was “a very positive result overall”, but added that the pricing shift was driven in large part by Florida-specific legislative reform.

“It is important just to call out that that could be a result that is specific to Florida,” he said.

“Too early to tell what 1/1 2027 looks like yet, but an interesting trend regardless, and a very positive trend for reinsurance buyers,” Schwebach added.