On the back of one of the worst loss years on record for the global insurance and reinsurance market, pricing corrections have not been as significant as many in the market had hoped for, driven by a number of factors, according to Willis Re’s 1st View renewals report.
Recent catastrophe losses are expected to result in losses of $136 billion for the re/insurance industry, and unfortunately for reinsurance companies this has happened at a time when profits are already under pressure in non-catastrophe lines and reserves are dwindling, according to Willis Re, the reinsurance arm of broker Willis Towers Watson.
Many in the space were hoping for substantial rate increases at the January 2018 renewals, but Willis Re’s report notes that pricing corrections have not seen a significant spike.
The reinsurance broker attributes this to a combination of “strong reinsurance market capitalization, losses being split over a number of different events and the fact that a large tranche of the losses were retained in the primary market.”
According to Willis Re, pricing across global property catastrophe and risk programmes is seeing average adjusted increases of between 0% and 7.5%, with some outliers either side of the range.
Global Chief Executive Officer (CEO) of Willis Re, James Kent, said; “No commentary on the January 1 renewal season can overlook the scale of human suffering and economic loss that the catastrophes in the second half year of 2017 have caused. The global reinsurance industry is central to alleviating the impact of the 2017 hurricane losses. The speed of claims payments from reinsurers to their clients has been exemplary and the value of reinsurance has been illustrated to many clients yet again.
“Clearly the 2018 renewal season will for many reinsurers be a disappointment in terms of the rating levels achieved. However, this must be balanced against the ability of the market to provide buyers with stability of capacity at reasonable prices with an orderly renewal process, which demonstrates the growing advancement of the market.
“As society as a whole is starting to look more closely at the role the global reinsurance market can play in helping to close the economic loss gap, the stability of the market bodes well for its future development.”
Also read: Rate rises underwhelm at January 2018 reinsurance renewals.
