Corporates in the property/casualty (P&C) and reinsurance space anticipate reinsurance rates to be flat to up 5%, with loss affected accounts expected to see the highest rate rises.
An anonymous survey of corporates by The Buckingham Research Group reveals an expectation of mid-single digit reinsurance rate increases, with 67% of respondents anticipating rates to be flat to up 5%.
Analysts echoed this sentiment, adding that commentary from a recent Florida market conference call suggests loss-affected accounts could see the highest increases.
As a result, reinsurers with a higher percentage of their business mix in property catastrophe lines, are expected to benefit the most from a positive shift in pricing.
Despite two consecutive years of an above-average level of catastrophe losses, the majority of market participants were disappointed with the rate response at the January 2019 renewals. There’s an expectation that more meaningful rate increases will be evident at the mid-year renewals owing to its focus on loss-affected regions.
While rate improvements failed to have a material impact on market dynamics at 1/1, the entry of third-party, or alternative reinsurance capital did slow when compared with previous years. Despite its slowed entry, the alternative market continues to expand, and of the 12 or so respondents to the survey, the majority believe alternative capital could fund around 20% of reinsurance limits.
Moving away from reinsurance, and the survey shows that most corporates believe that personal auto rates could rise by as much as 5% in 2019, while the majority also feel that commercial rates could increase by 5% in 2019.