Reinsurance News

Japan renewals were orderly with stable reinsurer capacity: Willis Re

2nd April 2019 - Author: Matt Sheehan

The April renewals in Japan were orderly despite the level of catastrophe losses in 2018, with reinsurance capacity remaining stable, according to broker Willis Re, the reinsurance arm of broker Willis Towers Watson.

JapanBuyers sought increased capacity, both on an aggregate basis and for earthquake occurrence, analysts observed in Willis Re’s 1st View renewals report.

Overall rate movements varied for Japan, with loss-affected programs experiencing some rate increases, but at lower levels than some reinsurers had expected.

Willis Re suggested that rate increases had been suppressed by capacity dynamics, as well as the economics behind overall reinsurer relationships with buyers.

Generally loss free accounts renewed at risk adjusted flat, although some loss-free wind and flood contracts saw modest uplifts.

The commentary came as part of Willis Re’s broader analysis of the April renewals, which saw reinsurers adopt a rational pricing approach underpinned by high levels of market capitalisation from both traditional and alternative sources.

Analysts stated that the mutual sector has been differentiated by reinsurers due to the minimal impact from 2018 natural catastrophe losses, while aggregate excess of loss structure have received increased scrutiny from the market.

Earthquake activity in 2018 had limited impact on the performance of Japanese earthquake pro rata treaties, Willis Re said, which generally renewed with very little change and remain in demand amongst reinsurers.

In terms of casualty lines, reinsurance structures for general third party liability also generally renewed at expiring terms with few changes in coverage and fairly stable pricing.

For personal accident, most buyers maintained existing structures, Willis Re reported. Earthquake exposure continued to grow, but the impact of this exposure increase on pricing was limited, as reinsurers were keen to expand their shares and offered competitive pricing.

Reinsurance pricing also remained stable overall for professional liability lines, while the primary directors and officers liability insurance market continued to expand despite losing some momentum.

Analysts noted that buyers’ demands for reinsurance have grown, with increases of limit and/or a broadening of coverage discussed by many at renewal, and some achieving broadened terms or buying greater limit.

Finally, Willis Re said that reinsurers were cautiously monitoring pharmaceutical products liability risks under treaties and some ongoing lawsuits in the U.S.

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