Reviewing buying activity from January through July 2024, Guy Carpenter has estimated that approximately $35 billion – $40 billion of additional property catastrophe limit has been purchased worldwide, driven by favourable conditions.
According to a recent report from the firm, this increase generally represents 5% to 10% of catastrophe capacity purchased.
“By the start of 2024, a healthier balance had returned to the global property catastrophe market. Reinsurers’ recovering profitability, coupled with additional available capital, created favourable conditions for cedents to evaluate additional property catastrophe limit purchases,” Guy Carpenter explained.
The firm continued, “Across geographies, demand significantly increased and reinsurers met this growing demand, placing the sector largely in equilibrium.”
Guy Carpenter noted that during the first seven months of 2024, in North America alone, over 60% of property catastrophe contracts included expanded limit with the top 20% purchasing in excess of $100 million of additional limit.
The firm’s report added that traditional reinsurers provided the majority of additional capacity while the insurance-linked securities (ILS) impact was primarily via catastrophe bonds and in some cases investor support of traditional reinsurers.
As the market looks ahead to 2025, Guy Carpenter anticipates that there will be additional factors providing further momentum for increased demand.
Key factors affecting buying decisions over the next 12 months include continued (albeit lesser) increases in property valuations; growth in overall exposure; model version changes; and focus on continued risk mitigation.
