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GC notes shift towards non-proportional capacity for Korean market at 4/1

22nd April 2021 - Author: Charlie Wood

Guy Carpenter analysts have noted a clear movement of capital during the April 1 reinsurance renewals in Korea, with capacity shifting from proportional to non-proportional and from risk to event.

guy-carpenter-logoPrior to the April 1 reinsurance renewals in Korea, expectations for pricing increases were reportedly quite high.

While Korea had not experienced any impactful losses in recent years, a mid-sized typhoon, heavy rain losses and several large single losses occurred in 2020, influencing the pre-renewal expectations.

However, GC analysts note how capacity was more than sufficient and certain markets were proactive as they sought potential cedents.

Elsewhere of note, following large single losses, many clients refrained from increasing their retentions and searched for more proportional capacity.

Additionally, Cedents were reported to have increased deductibles or reduced coverages to mitigate price increases.

Communicable disease exclusions and silent cyber exclusions were said to have been implemented in almost all programs without exception

More broadly, though discussions of pricing at Jan 1 and Apr 1 renewals have been characterised as slightly disappointing, Morgan Stanley have noted that pricing was generally up across the board and remained fairly strong.

Reinsurance pricing has somewhat lagged that of the primary market, but analysts expect sustained price increases for reinsurers on the back of several factors.

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