Florida’s state-backed Citizens Property Insurance Corporation approved a $5.5 billion reinsurance strategy for 2024 to address rising property exposure, projected at $3.6 trillion, and adapt to changes in the reinsurance market amid increased demand and constrained capacity.

Citizens Property Insurance Corporation, Florida’s state-backed insurer of last resort, has announced a $5.5 billion reinsurance strategy for 2024 in a move to address the state’s growing property exposure and adapt to changes in the reinsurance market.

Florida’s property exposure is projected to reach $3.6 trillion in 2024, up from $3.3 trillion in 2023, a 9.3 percent increase driven by population growth, new construction, and rising property values. Citizens, whose gross exposure grew by 31 percent in 2023, expects a further 7 percent increase in 2024.

The 2024 reinsurance strategy includes a $630 million “sliver layer” that provides annual per occurrence coverage for personal, residential, and commercial residential losses. This layer will work alongside the mandatory coverage provided by the Florida Hurricane Catastrophe Fund.

Above the sliver layer and the Catastrophe Fund sits Layer One, which aims to provide $4.9 billion in coverage for personal and commercial residential losses. This includes a $500 million renewal risk transfer through Lightning Re, a multi-year note providing aggregate coverage, and approximately $4.4 billion in occurrence and annual aggregate coverage from traditional and capital markets.

Changes in the reinsurance market have seen investors shift capital towards alternative investments like private credit, which offer higher returns. This shift, coupled with increased demand for risk transfer from states such as Texas, Louisiana, and California, has constrained capacity in the reinsurance market. Market pricing on a risk-adjusted basis for 2024 is expected to range from -5 percent to +5 percent, similar to 2023.

Despite this, the increased exposure and replacement costs necessitate substantial reinsurance coverage.