Willis Re, the reinsurance arm of global insurance and reinsurance broker Willis Towers Watson, has noted that reinsurers adopted a rational pricing approach at the April 1st renewals, underpinned by high levels of market capitalisation from both traditional and alternative sources.
The reinsurance broker’s latest 1st View report examines the April 1st renewals season, noting rate increases of up to 25% targeted towards loss-affected contracts and programmes.
Willis Re states that price increases were balanced by flat renewals for loss-free classes of business and programmes.
Despite the impacts of 2017 and 2018 catastrophe events, the reinsurance market remains highly competitive with strong levels of market capitalisation from traditional players and also insurance-linked securities (ILS) markets. Willis Re states that continued high levels of market capitalisation were the key to reinsurers’ rational pricing response.
Global Chief Executive Officer (CEO) of Willis Re, James Kent, said: “As the global reinsurance market looks to address the current supply demand imbalance, being able to demonstrate a stable and rational base plays an increasingly important role when developing and promoting solutions to new buyers and core clients.”
At the April 1st renewals, certain protection buyers sought to acquire increased capacity both on an aggregate or occurrence level, and Willis Re notes that the marketplace was able to respond, with capacity only being constrained when price was an issue.
At the same time, for the majority of buyers, long-term relationships remained vital and more important than the modest rate reductions offered in certain non-cat, loss-free classes of business.
The ILS space, according to Willis Re, remained a small “but unchanged” force in Japan, with increases for appetite from some funds in various regions.
“At a time when some participants in the global reinsurance market are promoting the need for substantial across-the-board improvements in pricing, reinsurers delivered considered, rational price adjustments – a sign of the market’s stability and maturity.
“As the global reinsurance market looks to address the current imbalance of supply and demand, the ability to demonstrate a stable, rational base plays a critical role in developing and promoting more solutions to new buyers and core clients,” said Kent.