Gallagher Re’s latest mid-year renewals report has found that property rate movements in the US has increased by up to 40%.
Pricing in some cases in the Florida market have even increased by up to 50%.
In the report, Gallagher Re stated that risk excess and catastrophe capacity started to become more constrained as some traditional London and Bermuda reinsurers have pulled back from property and catastrophe reinsurance.
However, while most reinsurers had reserved renewal capacity, finding new capacity to meet strong demand proved to be more difficult. The report highlights that capacity was more often deployed towards clients that had a history of profitable results, longstanding trading partnerships with reinsurers, and strong balance sheets.
At the same time, many reinsurers are also looking to move their capacity away from working layers to the higher end of both risk excess and catastrophe programmes. In addition to concerns regarding the frequency of loss, there has been increased attention on secondary and non-modelled catastrophe perils.
Meanwhile, pro rate reinsurance for specialty lines remains “attractive” for reinsurers who wish to gain access to compounded rate increases seen on original business in recent years. While on standard lines, reinsurers are tightening terms and reducing capacity in response to losses on Cat exposed and loss impacted regional quota shares.
Inflation and supply chain issues were addressed within the report also. Gallagher Re noted that some reinsurers are looking to further index exposures on tip of the cedents’ own insurance to value initiatives. But, where sufficient differentiating evidence was provided, reinsurers were generally willing to utilise buyers’ views of inflation in pricing models.
Lastly, the report highlights that while there is not a unified industry approach, progress towards Environmental, Social and Governance (ESG) protocols have become of universal interest to both cedent and reinsurer stakeholders within recent months.
