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Reinsurance pricing expectations high across lines, survey shows

26th November 2021 - Author: Matt Sheehan

Data from the latest Reinsurance News market survey, undertaken in collaboration with our sister-site Artemis, shows that market participants overall are expecting price rises across all business lines next year, with loss-affected lines in particular forecast for large increases.

The survey looked at responses from hundreds of identifiable market participants, of which more than 70% make or provide input into reinsurance buying decisions.

January 2022 renewals have been the subject of more than usual speculation in recent months, following another year of high catastrophe losses, and of course the persisting influence of COVID-19 on market trends and costs.

To provide some insight into this complex, we therefore questioned market participants on their specific reinsurance pricing expectations for 17 individual lines of business.

Unsurprisingly, the largest rate increases are forecast for loss-affected lines, in particular for US and European property catastrophe risks, following the impact of numerous large disaster events this year, including winter storms and hurricane Ida, as well as devastating floods in Europe.

For US property cat risks, just 6.5% of respondents to our survey expected to see prices fall at January, while 7.5% forecast flat pricing and an overwhelming 86% said pricing will increase, with the highest proportion of this camp anticipating rises in the +5% to +10% range.

The picture was very similar for European property cat risks, where even fewer respondents expected pricing to remain flat or experience a downturn, and where 89.2% anticipate increases of some kind.

More than a third of the total responses put the +5% to +10% range as the most likely again, but notably more than a quarter expect to see reinsurance rate increases of +10% or more for this line.

The full results are available online for free and you can analyse the data from responses here.

For property cat risks elsewhere, the proportion of respondents who expected to see flat renewals was somewhat higher, particularly Africa lines, where 31.6% said they did not anticipate a change in pricing.

But still, across these geographies, survey responses showed a clear expectation for significant increases, even if the majority in most cases favoured the flat to +5% range, below that of US and Europe.

Probably the most striking outcome of the pricing responses was for cyber, where more than half of respondents said they expect to see reinsurance pricing increases of +10% or more at the upcoming 1/1 period.

This expectation likely reflects the limited amount of reinsurance capacity still available, despite a marked increase in both exposure and demand following the move to remote-working since the outbreak of the COVID pandemic.

Optimism was also high for professional lines, where 37.8% of respondents predicted increases in the +5% to +10% range, and a further 19.5% said increases would be +10% or higher. The same was true of political risks, where around three quarters of respondents forecast increases, with the majority again favouring the +5% to +10% range.

Additionally, clear increases were signalled for retrocession business, across both property cat and marine & specialty lines, with a large proportion of respondents eyeing increases of +5% to +10% and higher.

Finally, the forecast for auto lines is worth noting, following an unusual couple of years for insurers in these lines, as claims were unprecedentedly low due to the COVID pandemic.

Here, 29.8% of survey respondents expect prices to remain flat, while 38.1% said rates would grow slightly, up to +5% increases.

Our data on reinsurance pricing expectations at 1/1 is freely available to readers in more detail here, alongside the full set of responses to our recent market survey.

We’re happy to discuss the results with industry participants and to discuss sponsorship enquiries from those looking to raise their profile in the reinsurance sector. Contact us.

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