Reinsurance Pricing To Rise For Cedents and Policy Holders
September 20, 2023
Reinsurers rendezvoused in Monte Carlo in September, and to no one’s surprise, decided to impose rate hikes on year-end reinsurance renewals, according to an article in Business Insurance. During presentations leading to the announcement, large catastrophe losses and inflation were cited as the driving forces behind the increases.
Increases last year in property catastrophe coverage approached 50 percent. Jean-Paul Conoscente, New York-based CEO of French reinsurer Scor, said increases of that magnitude aren’t in the cards, but they will be double-digit and pricing needs to increase for both cedents and policyholders.
Capital in traditional reinsurance is at about $461 billion, lower than the $475 billion record height of 2021. Thomas Blunck, CEO of reinsurance at Munich Re, said that alternative capital has been stuck at around $100 billion for the past five years, and explained that without a big capital inflow market dynamics are not changing,
The biggest changes, including higher prices and retentions, occurred in the North American reinsurance market. Sven Althoff, head of property/casualty reinsurance at Hannover Re, said that a capacity squeeze noted at the January 1 renewals was easing slightly at mid-year renewals, but expects the market to trend up in 2024.
Indexed reinsurance rates are still below 2010 levels in 2010, which was the last hard market peak. Natural catastrophe rates are about the same as 2010, which is not commensurate with the risk landscape, according to Gianfranco Lot, chief underwriting officer for a Swiss Re unit. “Adequate returns have not been reached,” he said.
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