Global renewal rates for property catastrophe reinsurance saw a wide range of outcomes at the January 1st 2024 renewals, with non-loss affected accounts largely flattish, but loss impacted seeing increases of up to 30%, according to Guy Carpenter.
The reinsurance broker highlights a market where reinsurance underwriters were motivated and responsive to cedent needs, driving a better outcome than a year ago.
In rate movement terms, there was diversion across reinsurance classes of business, as well as within them, it seems.
Global property catastrophe rates saw some of the biggest increases again, with increases of as much as 30% reported for certain loss-impacted programs.
However, the range of rate increase was wide, even for the loss-impacted, with Guy Carpenter reporting rates moving from 10% to 30% higher for these more challenged property cat renewal placements, on a risk-adjusted basis.
For non-loss impacted property cat reinsurance renewals, the outcome was much better, with placements at near-flat to up in single digits, the broker said.
Around these ranges, in property cat renewals, there has been significant variation as well, Guy Carpenter explained.
But pricing pressure was greatest at the lowest end of programs, while any risk-adjusted decreases seen near the upper portion of placements is said to have been reflective of the adequacy of minimum rates-on-line and sufficient reinsurance capacity.
In the property reinsurance market, Guy Carpenter also noted that markets remained sensitive to pricing, attachment point and the overall adequacy of program structrues.
But, importantly the reinsurance broker said that terms and conditions “were borne out of the demonstrable corrections made throughout 2023,” suggesting little in the way of changes.
In fact, when it came to subjectivities such as strike, riot and civil commotion (SRCC), terror, and cyber, early and proactive discussions in the renewal process helped to lead the market and Guy Carpenter notes that the January 2024 renewal saw “material concurrency improvements among placements.”
At the casualty reinsurance renewals, Guy Carpenter explained that it was a different picture, with pressure on pro rata ceding commissions as well as excess of loss pricing.
In casualty risks, the renewal negotiations were “nuanced and bespoke,” the broker explained, but added that reinsurance capacity for casualty exposures proved “ample once market clearing terms were met.”
Here, it was important to differentiate client portfolios, and ensure that actuarial assumptions reflected go-forward portfolio strategies, Guy Carpenter said.
In addition, continued discipline in limit deployment, risk selection and other underwriting measures needed to be seen, as these efforts needed to be accounted for in renewal pricing, the broker explained.
The property retrocession market was another area of improvement at the January 2024 renewal season, it seems.
Guy Carpenter explained that retro “capacity was available and not constraining reinsurers’ risk appetite,” which was a sharp contrast to a year ago.
At the same time, the retrocession renewals saw price improvements mainly occurring in the middle to upper layers, while retention levels largely held steady despite exposure growth of underlying portfolios of retro cedents, and at the same time the terms achieved were more consistent within contracts, Guy Carpenter said.
Overall, it was a “smoother” January reinsurance renewal, with a better, more orderly outcome for the majority of the market, it seems.
