Reinsurance executives’ 6/1 reinsurance renewal pricing expectations remain satisfactory but unspectacular, according to a new KBW report.
Florida renewals are expected to end up at 5-10%, with bigger increases on loss-impacted accounts.
One executive anticipated 20-30% increases for Florida- focused property insurers whose expansion into other Gulf states proved less diversifying than initially expected.
Meanwhile, executives still expect P&C re/insurance rate increases in most lines and regions over the next 24 to 36 months.
Some lines are reported to appear adequately priced, while others still need – and are achieving – margin-expanding increases.
One executive noted that ample reinsurance capacity is boosting ceding commissions, but persistent 10-15% primary rate increases still outpace rising cedes, translating into still-improving expected returns.
Elsewhere, executives expect sustained significant cyber insurance rate increases, in part reflecting its uniquely complex and evolving risk environment.
Along with rate increases, both insurers and reinsurers remain very focused on controlling their individual aggregate exposures through policy language, risk-sharing, and liability limits and sub- limits.
As for reinsurance competition, established players are described as not seeming too concerned by newly established competitors, with the former group seeing their bigger balance sheets and established reinsurance relationships as giving them broader access to potential risks.
Newer reinsurers are typically A- rated, and were described largely as “filling in gaps” (typically within loss- impacted layers; many established reinsurers are moving to higher layers), where last-minute program shortfalls remain.
Most executives cited the need for increasingly precise contractual terms and conditions as their primary takeaway from the COVID pandemic, and most similarly reported heavy legal involvement to crystallize and tighten policy language to reduce unintended losses.
Primary insurers, meanwhile, generally want their reinsurers to “follow their fortunes,” but reinsurers are reportedly having some success in pushing for contract-specific negotiations in some pandemic-exposed lines like residential risks.
