Progressive fortifies cat reinsurance program in Q2’25
US insurer Progressive has announced the successful renewal of its catastrophe reinsurance arrangements in the second quarter of 2025, reinforcing its protection against significant weather events.
The renewed programs, which address the company’s risk tolerance, include new reinsurance contracts under the company’s per occurrence excess of loss program for its personal property business.
This reinsurance program has a retention threshold for losses and allocated loss adjustment expenses (ALAE) from a single catastrophic event of $200 million for a storm outside of Florida and $75 million for a storm in Florida.
Progressive’s reinsurance program covers $2.0 billion in losses and ALAE, in general, with significant additional coverage for multiple hurricanes. Specifically for Florida, this coverage is estimated to reach $2.2 billion, which includes the Florida Hurricane Catastrophe Fund.
To provide protection against the accumulation of smaller, more frequent events, the insurer also introduced a new catastrophe aggregate excess of loss reinsurance contract for claims occurring in 2025.
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This contract has multiple layers of coverage. The first retention layer threshold ranges from $450 million to $475 million, excluding named tropical storms and hurricanes, and the second retention layer threshold is $525 million, including named tropical storms and hurricanes.
The first and second layers provide coverage up to $75 million and $100 million, respectively.
As part of the 2025 aggregate excess of loss program, Progressive also entered into a severe convective storm parametric loss aggregate coverage, which covers a type of thunderstorm characterized by strong winds, heavy rain, large hail, thunder, lightning, and sometimes tornadoes.
This parametric loss coverage provides $15 million of coverage, net of a retention of $665 million. Parametric coverage is designed to provide quick payouts based on predefined event triggers, rather than lengthy damage assessment process.
“While the total coverage limit and per-event retention will evolve to fit the growth of our business, we expect to remain a consistent purchaser of reinsurance coverage,” a Progressive spokesperson stated.
Adding: “While the availability of reinsurance is subject to many forces outside of our control, the types of reinsurance that we elected to purchase during the first half of 2025 were readily available and competitively priced. On a year-over-year basis, we did not incur a material change in the aggregate costs of our reinsurance programs.”
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