The Guy Carpenter U.S. Property Catastrophe Rate on Line Index increased by a significant 30.1% at the January 2023 reinsurance renewals, taking rates to an all-time high, according to the latest data from the global reinsurance broker.
Guy Carpenter, which is Marsh McLennan’s reinsurance broking arm, has been maintaining its proprietary index of U.S. property cat reinsurance rate-on-line (RoL) movements, on brokered excess of loss placements, since 1990.
It covers U.S. property catastrophe reinsurance renewals and is updated after the January 1st and July 1st renewal seasons reflecting the full year, by calculating the change in RoL year-over-year across the same renewal base.
Given that it’s only February, the 2023 RoL is based on the January renewals only, so the figures are preliminary.
The data shows that, for full-year 2022, the Index increased by 14.8%, taking the U.S. property cat reinsurance RoL Index back to its highest level since 2009.
The pricing from the January 2023 reinsurance renewals has now been factored in, and at a 30.1% rise in RoL, represents the steepest year-on-year increase since the 76% seen in 2006, which followed Hurricane Katrina, and the 68% witnessed in 1993, after Hurricane Andrew.
An increase of this magnitude from the full-year 2022 RoL, has taken property catastrophe reinsurance rates-on-line in the U.S. to a new high following the January 2023 renewals, above the previous record seen for the full-year 2006.
It’s also worth noting that since 2017, the cumulative rise of this Index has reached roughly 97%, which reflects the fact reinsurers have been pushing for higher returns after a prolonged soft market environment.
This Index will be updated later in the year after the July renewals, so it will be interesting to see how reinsurance rates-on-line trend in the U.S. property catastrophe market through the months ahead, and whether the increase is even more substantial than these preliminary figures suggest.