The recent renewals in the Accident, Health, and Life (A&H) reinsurance market have been marked by turbulence due to limited retro capacity in some lines of business, according to Aon’s Accident (Re)Insurance April 2023 report.
The report highlights that some reinsurers were forced to pay over 100% more in retrocession costs, while others faced restrictive terms and conditions in their renewal terms. This caused delays in renewals as reinsurers waited for clarity before establishing their reinsurance position.
Negotiations for renewals required multiple rounds, with reinsurers pushing heavily on pricing and terms and conditions, particularly those related to the Ukraine conflict and the inclusion of War in other territories. Insurers managed through these changes by increasing retentions or accepting new exclusion language.
Despite the challenging market conditions, there was still adequate capacity to complete A&H catastrophe programs. However, a handful of reinsurers redirected their capacity from A&H to other lines of business to get a better return on their deployed capital.
Natural catastrophes caused global insured losses of $132 billion in 2022, well above the 10-year average of $81 billion, according to Aon’s Weather Climate Catastrophe Insight.
Meanwhile, dozens of claimants have filed a £6 billion ($7.22 billion) claim against Lloyd’s of London and insurers, including American International Group, after Russia seized over 400 western jets worth £8 billion since its invasion of Ukraine. Insurers claim they are not liable because the planes have not been damaged or lost.
The A&H reinsurance market is still trying to reduce its exposure to systemic risks, with the impact of Covid, Ukraine, and inflation being the primary drivers, the report noted.
