Global reinsurance market survey – H2 2018
Hundreds of responses from identifiable participants were received, including numerous reinsurance market Chief Executive Officers and senior decision makers.
In total over 62% of the respondents provide input to or are responsible for reinsurance buying decisions and results suggest that market conditions may remain challenging for some.
“With this survey we wanted to take the temperature of the global reinsurance market at what is a key time for the industry,” explained Steve Evans, our Owner and Editor-in-Chief.
“We’ve seen dramatic changes in reinsurance market dynamics over the last few years, not least the evolution and expansion of the ILS market.”
“As a result, we wanted to reach out to senior decision makers in the industry with our survey and analyse their responses to see what we can learn in advance of the renewals at the end of this year,” Evans continued.
Data collected from the survey suggests that pricing is expected to be relatively flat across most lines of reinsurance business, with significant rate increases anticipated for U.S property catastrophe risks following the losses of 2017, retrocessional protection, as well as certain under-performing or emerging lines of business.
However, even these lines are only expected to experience rate rises in the low single digits. Overall, the feeling is that rate momentum will continue to fade at the January 2019 renewals.
Half of respondents believe that it will take a catastrophic loss of more than $200 billion, with the majority opting for a loss of more than $250 billion, to drive a meaningful turn in market pricing.
Insurance-linked securities (ILS) and third-party capital is expected to expand further and claim an increasingly larger slice of the overall reinsurance market pie.
The expectation is that the ILS market will account for between 20% and 25% of dedicated reinsurance capital by 2020. At the same time, 65% of our survey respondents said they plan to use more ILS capital within their businesses.
Reasons for purchasing reinsurance protection remain varied, but earnings protection and reducing catastrophe exposure were the two most important factors to those surveyed.
Regardless of the reasons, a large majority of respondents plan to purchase a similar level of reinsurance protection or a little more in 2019, suggesting a slight uptick in demand.
Finally, we asked the respondents to rank the key factors that they would consider when choosing a reinsurance counterparty for the renewals and price was ranked as the most important, followed by credit quality / rating.
The full results of the global reinsurance market survey provide a useful test of the temperature of the industry at this key time, offering insight on sentiment and expectations as we move towards the January 2019 reinsurance renewals.
“We hope that market participants find the results enlightening and useful in making their strategic decisions for the renewal season ahead,” Evans said.
“We’re making the full results freely available and we’re happy to discuss them with any industry participants. We’ll also be analysing the full reinsurance market survey results over the coming weeks on both Reinsurance News and Artemis.bm.”
We’ve made the full results of this global reinsurance market survey freely available to our readers and we’re happy to discuss the results with industry participants and to discuss sponsorship enquiries from those looking to raise their profile in the reinsurance sector. Contact us here.