In a recent market analysis, Guy Carpenter, a leading reinsurance brokerage firm, highlighted key trends in the trade credit, bond, and political risk reinsurance sector.
Despite a backdrop of over-supply of reinsurance capacity, the market has maintained relative stability, with no significant price increases noted.
One notable trend is the cautious approach of reinsurers towards under-deployment, reflecting their concerns about the underlying risk environment.
This prudence stems from inflation being a more pressing concern than geopolitical tensions, such as the Russia-Ukraine conflict. Inflation has had a noticeable impact on costs and exposure growth, with expectations of related claims materialising in due course.
Looking ahead to January 1, 2024, Guy Carpenter anticipates that quote ranges will begin from a narrower base compared to 2023. This narrowing of pricing ranges is expected to be influenced by the performance of individual cedents.
Reinsurance buyers have demonstrated a pragmatic approach, prioritising favourable conditions and capacity over price. Building and maintaining long-term, reliable relationships with reinsurers have taken precedence over pushing for marginal rate reductions.
David Edwards, Co-Head of Credit, Bond, and Political Risk at Guy Carpenter, noted, “The prevailing sentiment has been a sense of realism about rate developments, with insurers more focused on favorable conditions and capacity than price.” He added, “Despite a general over-supply of reinsurance capacity for credit risks, there has been under-deployment by reinsurers, who typically remain more cautious than insurers about the risk environment.”
As the industry prepares for forthcoming renewals, Edwards emphasised the importance of providing comprehensive and high-quality data early in the process.
He stated, “There will be even greater onus on cedents to provide the maximum possible data with detailed quality information provided early being indispensable for generating the best negotiating position. Mid-year renewals have already demonstrated that there is tangible value in supplying more granular data earlier in the process.”
