Guy Carpenter, a global risk and reinsurance specialist, highlights the notable transformations and key trends in the non-marine retrocession market as 2024 approaches, shedding light on evolving strategies for buyers.
One prominent trend identified in the non-marine retrocession market is the availability of excess capacity at the upper end of programs, contrasting with limited options at lower levels, particularly for non-modeled or poorly modeled perils.
Although non-marine retro rates have stabilised after a period of hardening, capacity remains uncertain due to fluctuating investor appetite. Nevertheless, new capacity has entered the market, offering potential opportunities for insurers and reinsurers.
Mid-year negotiations have transitioned from being primarily capacity-driven to focusing more on pricing, attachment levels, and coverage.
This shift signifies a pragmatic and considered approach, as retrocession providers are increasingly emphasising minimum attachment levels, often excluding potential exposure to higher frequency perils and attritional losses.
James Boyce, CEO of Global Specialties at Guy Carpenter, highlighted the recent market trends, stating, “The non-marine retro market has experienced significant rate hardening in recent years.
However, greater price stability was witnessed between January 1, 2023, and the mid-year renewals. The mid-year placements also saw movement on minimum rate on line levels and greater reinsurer willingness to deploy capacity at lower rates.”
Richard Morgan, Head of Non-Marine Specialties at Guy Carpenter, emphasised the importance of cedents’ ability to navigate a wide pool of capacity or capital providers when optimising retrocession strategies in 2024.
He noted that the current hard market dynamics provide an opportune moment for buyers to cultivate extensive relationships across both traditional and alternative markets, creating competitive tension not only for the January 1, 2024 negotiations but throughout the broader market cycle.
