Reinsurance broker Guy Carpenter has reported that at the January 1st, 2024, reinsurance renewal, its Global Property Catastrophe Rate on Line Index (ROL) increased by 5.4% when compared with the prior year.
Although this 5.4% increase is a steep decline from the 27.2% rise seen at the Jan 1st, 2023 renewals and the 29.3% recorded for the full-year 2023, it shows that reinsurers continued to achieve rate rises on global property cat contracts at the recent renewals.
The broker notes that outcomes at 1.1 2024 were affected by regional loss activity, structure adjustments, and also ongoing scrutiny of pricing adequacy.
2023 is expected to be a profitable year for reinsurers on the back of significant rate increases, adjustments to terms and conditions and higher attachment points, which saw the primary market retain a greater share of the more than $100 billion in insured cat losses.
While year-on-year rate momentum has slowed in the global property cat space, further increases at 1.1 2024 suggests that absent elevated loss activity, 2024 could be another strong year for the industry in terms of profitability.
In terms of regional calculations, Guy Carpenter reports that the US index increased by 5.2% and Europe slightly higher at 7.6% at the January 1st, 2024, reinsurance renewals.
Guy Carpenter reported previously that global renewal rates for property cat reinsurance saw a wide range of outcomes at 1.1 2024, with loss impacted accounts seeing increases of up to 30%, and non-loss affected accounts largely flattish.
All in all, the reinsurance broker noted the emergence of a responsive reinsurance market during the renewals, characterised by ample capacity and a more commercial approach to trading partnerships.
The Guy Carpenter ROL index, shown below, is a measure of the change in dollars paid for coverage year on year on a consistent program base.
Our insurance-linked securities (ILS) focused sister publication, Artemis, tracks the Guy Carpenter RoL index, and you can see the index value and percentage change year-on-year from 1990. It shows that since 2017, global property cat reinsurance pricing is up 76%, and has increased every year since.
