According to reinsurance giant Munich Re, the post-loss rate increases coming at the January 2018 and future reinsurance renewals could be higher than those witnessed after the 2011 earthquake industry losses.
While overall industry losses to insurance and reinsurance interests may be less than seen in 2011, the way 2017’s loss events manifested means that hurricanes Harvey, Irma and Maria, as well as other loss events, could push rates further up.
The reinsurer told analysts at a sell-side dinner yesterday that the reason it believes the market hardening could be greater than the one seen in 2011 is the fact that losses have fallen within peak risk zones for the reinsurance markets.
So the losses they caused affected many more market participants, including the alternative capital providers, raising the possibility of a greater capital hit and more urgency to raise rates across the globe.
As a result Munich Re is hoping for decent rate rises at the January 2018 reinsurance renewals, and as these account for around half of its annual renewal business and one-third of its profits, according to the analysts from J.P. Morgan Cazenove, the company is certain to push as hard as it can for whatever rate increases it can get.
