Aspen Insurance Holdings Limited (Aspen) has said that it expects to see rate increases of up to 20% and higher in reinsurance lines and up to 20% in primary lines of business, following market dislocation after high levels of catastrophe losses in the third-quarter of this year.
Insurer and reinsurer Aspen announced losses of $310 million, net of reinsurance and reinstatement premiums, from the impacts of hurricanes Harvey, Irma, and Maria, with the majority being assumed by its reinsurance segment.
In light of the expected $100 billion overall insurance industry loss from third-quarter catastrophes, which includes the three hurricanes and two powerful Mexico earthquakes, insurers, reinsurers, intermediaries, and risk transfer market analysts and experts have discussed the potential for rate increases across the sector after years of falling pricing.
Aspen, in its third-quarter 2017 investor presentation, is the latest firm to note expected rate increases in light of its current view of market dynamics.
For reinsurance lines of business, Aspen expects the biggest increases to occur in U.S. property catastrophe lines, with rates increasing by 5% – 20%, and by even more in loss-affected areas. In international property catastrophe lines Aspen expects to see rate increases of between 2.5% and 10%, which is in line with increases it expects to see in U.S. risk excess and pro rata lines.
The re/insurer expects to see rates in the international risk excess and pro rata lines increase by 2.5% to 7.5%, while rates in the marine sector are expected to rise by between 5% and 15%.
For primary business, Aspen expects the largest rate increases to be seen in global energy and construction lines, increasing by between 10% and 20%. Primary global marine business is expected to see rate increases of between 7.5% and 15%, while Aspen sees rate increases in U.S. property programs of between 5% and 15%.
How much rates actually go up by at the upcoming January 1st, 2018 renewals, and how sustainable any rate movements are remains to be seen, but it’s clear from numerous reports that insurers and reinsurers are expecting increases across most of the business, both primary and reinsurance, with the largest increases occurring expected to be in loss-affected reinsurance lines of business.
