Total demand for renewals at June / July were flat to down slightly in private market reinsurance demand, according to global re/insurance brokerage Aon.
Meanwhile, dynamics of peak Florida reinsurance placements shifted following two years of loss activity and in some cases increased loss development for Hurricane Irma.
Aon says this resulted in several insurers electing higher participation percentages for their Florida Hurricane Catastrophe Fund limit.
In addition, a few non-core reinsurance layers were eliminated from overall placements to maintain spend closer to prior years.
Most notable is the increase from the traditional markets where reinsurers have seen low catastrophe loss activity coupled with a stock market rebound.
Aon adds that the capital emanating from traditional reinsurers rose 5% to $512 billion.
Alternative markets showed a decrease of 4% over the same period and ended up at $93 billion, driven in large part by loss payments and investor redemptions.
In Florida, the private market benefited from legislative changes enacted this spring including an increase in the Loss Adjustment Expense coverage provided by the Florida Hurricane Catastrophe Fund from 5% to 10%.
This resulted in positive impacts on placements for 2019 and is expected to be fully realised in future placements.
In addition, assignment of benefits legislation was signed into law in May to curtail historical abuse of the coverage.
In Australia, despite weather activity including Sydney Hail (AU$1.5 billion) and Townsville Flood (AU$1.5 billion) having affected mainly first layers of nationwide programs, occurrence programs were completed with some renewing reinsurers looking for increased participations on certain layers and new reinsurers continuing to develop relationships in the region.
Aon states that a revision of the view of earthquake frequency in Australia was released by Geoscience Australia during the year which resulted in large reductions in modelled losses for most earthquake-exposed portfolios.
Despite this, vertical limits purchased remain unchanged.
With the predominant renewals in Florida and Australia at June and July 1, Aon says both territories experienced loss activity that affected lower layers of programs in 2018 and resulted in some increases in portions of programs.
Nevertheless, supply remained adequate for placements tempering any potential further increases.
