Risk-adjusted reinsurance rates in Australia are projected to decline between 10-15% at the July 1st renewals, with reductions likely to be closer to the higher end of the range, according to analysts at investment bank and financial services company, Goldman Sachs.
Analysts at Goldman Sachs expect favourable rate reductions for buyers at the mid-year renewals, following risk-adjusted rate declines at both the January and April renewals, with pricing returning to early 2020s levels.
Despite warnings of rate reductions of up to 15% in Australia, analysts emphasise that this downward trend is unlikely to be the bottom for reinsurance rates.
This is because ROEs for many reinsurers remain adequate and are still over-earning long-term averages, a trend which a benign loss experience could further support.
Analysts note that globally, rate reductions have been uniform across all major markets and fail to reflect the starting position of rate adequacy in each of the individual geographies.
Goldman Sachs added that because markets across Australia, Africa, and China are experiencing nearly identical rate reductions regardless of their localised risk profiles, the global landscape for rate adequacy is becoming increasingly fragmented and uneven.
