In the latest update from Gallagher Specialty on the global property insurance market, significant shifts are noted, particularly in the USA region.
Reports indicate smoother treaty renewals towards the end of the year, with reinsurers largely maintaining high attachment points on Cat Excess of Loss (XOL) programs.
Modest rate increases are observed on clean programs, while oversubscription is noted in higher layers of programs. However, risk excess placements saw larger rate uplifts and tightening of terms.
A notable trend is the increased capacity in Excess & Surplus lines (E&S) for both Cat and non-Cat business.
Insurers are aiming to expand their top line and line sizes, with more capital allocated to primary property insurance following favourable results in 2023.
Expansion of facility/consortium arrangements, including market tracking facilities and algorithmic follow syndicates, is observed, which could impact underwriter ratings but is positive for insureds.
While there’s increased appetite for Cat risk, E&S markets are also focusing on growing non-Cat exposure to balance portfolios and reduce overall volatility.
Insurance to value adequacy remains a conversation point, with expectations of a muted impact from inflation on reported insured values.
Critical catastrophe accounts are perceived to have comfortable rating adequacy after years of rate increases, though secondary perils such as severe convective storms, wildfires, winter storms, and floods are gaining attention following significant losses in 2023.
Higher deductibles are expected to persist, with underwriters maintaining discipline, particularly in pricing negotiations.
The release of RMS’s new Cat model (V23) raises debates on its potential impact on pricing in 2024.
Challenges persist in certain classes due to loss of experience, including Habitational, Food, and Agribusiness.
Alternative risk transfer mechanisms like parametric, captives, and ART solutions continue to be viable alternatives for buyers.
