Guy Carpenter executives expect demand for reinsurance protection to grow heading into the January 2024 renewals, while the reinsurance broker also feels that catastrophe rates are broadly adequate after significant adjustments in 2023.
During its recently held virtual pre-Monte Carlo media briefing, executives and leaders from Guy Carpenter discussed current reinsurance market conditions and the key January 2024 renewals against a backdrop of a hard market landscape.
“Heading into the January 2024 renewals, we believe the demand for reinsurance will grow with reinsurers willingness to deploy capital also increasing, although underwriting discipline will not subside,” said David Priebe, Chairman of Guy Carpenter.
“Thorough preparation and thoughtful differentiation will enable cedents to adjust their own approach and leverage a range of solutions to transfer risk into profitable returns,” he added.
He went on to state that transferring risk is the reinsurance sector’s specialty and that through innovation and collaboration the industry generates both stability and opportunity.
“The market evolution has once again propelled the imperative changes in the placement circumstances to ensure resilience. A new cadence has emerged, and we are equipped to thrive amidst the new normal of interconnected and perpetual risks,” continued Priebe.
Lara Mowery, Global Head of Distribution at Guy Carpenter, also featured in today’s briefing, and offered her thoughts on the rate environment, loss trends, and how cedents have looked to navigate the current market environment.
“With significant adjustments in 2023, catastrophe rates are broadly adequate, but their perceived adequacy may be dependent on the ongoing patterns of loss activity and development. As we’ve seen, our view of risk is shaped by the knowledge we gain as new events occur,” said Mowery.
She also highlighted how many cedents have significantly reshaped their own portfolios throughout the last 18 months in light of recent loss trends and the resulting challenges in the reinsurance market
“This includes rate increases that are still working their way through portfolios, underlying product adjustments, such as higher insurance deductibles, and managing concentrations,” she said.
Adding: “While reinsurers are able to respond fairly quickly within a renewal cycle to revisiting the composition of their own business, it takes time for these impacts to work through the insurance portfolios.”
Ultimately, said Mowery, cedents have now had more time to begin adapting to 2023 market adjustments, which could play out in numerous ways at January 1st, 2024.
This includes “cedents funding increased reinsurance purchasing with growing premiums, or alternatively mitigating the amount of reinsurance required as a result of more intensive aggregate management.”
