Reinsurance pricing ‘moderates’ at mid-year renewals: Guy Carp
Global cat rates flat to down mid to high single digits
Mid-year reinsurance renewals met increasing demand as loss-free property programmes saw pricing ease, with global cat rates flat to down mid to high single digits, according to broker Guy Carpenter. But it said pricing and underwriting scrutiny persisted for casualty programme renewals in the June/July season.
The broker described the reinsurance market as transitioning. “Well-positioned cedents achieved greater concurrency and pricing consideration in this positive but still-cautious trading environment,” said Dean Klisura, president and CEO of Guy Carpenter. “However, headwinds, including unsettled macroeconomic conditions and the geopolitical environment, are leading to shifting risk appetites.”
Guy Carpenter’s US Property Catastrophe Rate on Line Index tracked as flat year-on-year, while global property catastrophe reinsurance rates were flat to down by mid to high single digits. Some cases recorded risk-adjusted rates down 10% or more in the upper layers of loss free accounts in a “moderating” pricing environment, Guy Carpenter said.
Late last week Aon also reported a more competitive marketplace at mid-year renewals. It said increased appetite from both traditional reinsurance and ILS is creating downward pressure on pricing for US insurers, including Florida specialists that saw rate cuts for the first time in three years,.
“The reinsurance industry has responded to measurably increased demand in 2024, which has materialised at a level above many expectations. Reinsurers’ attractive returns and improved capital positions are facilitating increased capacity in several sectors,” said David Priebe, chairman of Guy Carpenter.
The broker said the majority of property placements were completed on time or early, while risk programmes remained under scrutiny as concerns continued about the frequency and severity of large losses.
Casualty renewals varied by sublines, with US exposed general liability and excess/umbrella placements under continued pricing pressure for excess of loss programmes. But financial lines saw downward pressure on ceding commissions, driven by D&O and the underlying rate environment, Guy Carpenter said. It added that buyers of cyber reinsurance were met with improved terms across all structures.
“Mid-year cyber renewals saw ongoing interest in alternative structures, including event-based covers, continuing a trend observed at 1 January,” the broker said.
The second quarter of 2024 was the most active on record for cat bonds, driving a record first half year, with $11.9bn placed by 24 June. This took the total outstanding notional amount of cat bonds to more than $44.6bn.
