The combination of the current inflationary trend and challenges in the property space is driving growth in values and total insurable values (TIVs), leading many buyers of reinsurance to seek more limit at the upcoming renewals. But as reinsurer appetite for property catastrophe business wanes, Aon sees a marketplace “that’s going to need more navigating than in the past few years”.
Speaking during insurance and reinsurance broker Aon’s ongoing Reinsurance Renewals Season Brief, Andy Marcell, Chief Executive Officer (CEO) of Aon Reinsurance Solutions, explained that there’s somewhat more demand and less appetite for property cat business ahead of the January 1st, 2023, renewals.
In some ways, he explained, it’s a tale of two cities.
“In the one city we’ve got property reinsurance and then in the other city, we have all other reinsurance where in particular casualty and specialty business, there seems to be in all those classes ample appetite and interest,” said Marcell.
On the property side, Marcell noted that much has been written about the challenges facing the market, noting that with inflation and property, “there’s obviously a growth in values and TIV’s and as a consequence, many of our clients around the world will be seeking to purchase more limit.”
However, buyers are hoping to procure more reinsurance limit at a time when numerous reinsurers, but importantly not all, have moved away from property cat at the current pricing levels in an effort to lower volatility and bolster profitability.
“So, as a consequence, we have somewhat more demand and less appetite for property cat,” said Marcell.
“We see a marketplace that’s going to need more navigating than in the past few years, and we think that can be navigated because at Aon and we’re convinced on property cat, when we look at our global portfolio, which is significant, and has a wonderful geographic spread,” he added.
According to Aon, over the past decade, the loss ratios, on average, have performed pretty well and many of the layers that the firm has have been untouched by any kind of events.
“So, we think that for those reinsurers that can navigate and manage a global property cat portfolio, there’s ample opportunity to make returns and to satisfy the client needs which are growing and in the end, you know, reinsurers as a business need to maintain their relevance to our clients,” said Marcell.