Significant Shifts Mark Global Property-Casualty Reinsurance Renewals
January 04, 2024
In a noteworthy departure from the previous year, the January renewal season has witnessed substantial transformations in market dynamics within the global property-casualty reinsurance sector, according to a recent report from Gallagher Re.
The report, Gallagher Re 1st View: What a Difference a Year Makes, published January 2, 2024, notes that last year at this time, property catastrophe reinsurance was deemed unpredictable and volatile, prompting a reduction in capacity and modifications in coverage, attachment, and pricing.
Current property supply and demand have reached an equilibrium, according to the report, which attributes the recovery to a combination of retained earnings, modest capital infusions, abundant retrocession capacity, and robust Insurance-Linked Securities (ILS) markets, collectively augmenting the available catastrophe reinsurance limit.
Gallagher Re's 2024 outlook paints a picture of stability and predictability, fostering a more agreeable atmosphere for all stakeholders compared to 12 months ago. Particularly noteworthy are signs of overplacement on well-structured programs, indicating an improved position for certain buyers heading into 2024. While reinsurers have managed to maintain their positions in terms of pricing and structure, some buyers continue to express dissatisfaction with the perceived scarcity of available capacity, the report observes.
Specific to the United States, the report says, "reinsurers returned to a more bespoke, client-specific underwriting approach, heavily influenced by company performance and strategies related to rate, insurance to value, deductibles, and other cost-sharing initiatives."
While loss-impacted programs continued to experience attachment point pressure, reinsurers did not apply the same attachment point pressure for loss-free programs renewing this January.
Similarly, risk-adjusted rate decreases appeared in higher layers of loss-free programs in certain venues, particularly for those with new capacity placed in 2023, according to the report. On the other hand, price sensitivity persisted on loss-impacted programs.
Programs facing the most underwriting scrutiny were those containing event deductibles within the catastrophe aggregate structures, according to Gallagher Re.
January 04, 2024