Softening property reinsurance market across most regions, says Aon

Global property reinsurance rates were typically down in the mid-single to mid-teen percentage range at 1 Jan, but Canada, the UAE and Central and Eastern Europe (CEE) were notable exceptions to the more favourable renewals, according to Aon. “Globally, property rates on a risk-adjusted basis were down year on year, driven by ample capacity and the increased risk appetite of reinsurers… competition was most intense for global insurers and US nationals, which saw the largest reductions, while pricing for US regional insurers was more moderate,” the broker says in its Reinsurance Market Dynamics January 2025 Renewal report. It adds that property reinsurance rate reductions were in the single-digit range in Europe, apart from loss-affected markets where reinsurers took a client-by-client approach. Aon found that the losses from hurricanes Milton and Helene, which helped push the 2024 tally of insured losses above $140bn, ultimately had little effect on the January 2025 renewals. “Despite an active hurricane season and severe convective storm losses in North America, the impact of natural catastrophe losses on renewals was largely limited to local markets,” it says. Aon reports that reinsurance buyers also enjoyed more flexible terms and conditions at 1 Jan. “Ample capacity and healthy competition led to more flexibility from reinsurers around terms and conditions, and coverage at the 1/1 renewal. Buyers have largely unwound non-concurrency of terms and coverage that arose from challenging renewals in January 2023,” it says. The report notes that demand for local earthquake insurance and reinsurance has “surged” since the devastating quakes that struck Turkey and Syria in the first quarter of 2023. This increase in demand for reinsurance has put quake capacity under pressure, resulting in single-digit rate increases at 1 Jan 2025, in addition to the large price increase applied at the January 2024 renewals. Aon also reports that Canada was a “stand-out exception” to the more favourable reinsurance market at 1 Jan following a historic year for natural catastrophe losses in the country. Despite adequate capacity available at 1/1, pricing was up by high single digits, and substantially higher for insurers with programmes impacted by multiple loss events, it says. The report explains that adequate capacity was available for CEE countries following floods from Storm Boris in mid-September caused billions of euros of damage in parts of the Czech Republic, Poland, Austria, Slovakia and Romania. But it says that there were meaningful price increases for excess of loss reinsurance in the Czech Republic. Aon notes that despite comparable severity with major flood events in 1997 and 2002, a significant portion of damage from Storm Boris was avoided due to advanced meteorological forecasts, preparedness of emergency response services and flood defences constructed to protect cities in the region following the previous events. Property catastrophe reinsurance programmes in the UAE underwent “restructuring” at the January renewals, following historic storm and flood losses in Dubai and other parts of the region in April, says the report. For the rest of the Middle East, the renewal was generally stable, and more capacity was offered for Saudi Arabia on a proportional basis to cater for rapid growth of the market. Aon also says that capacity increased at 1 Jan for the per-risk reinsurance market, which had been affected by loss activity and the withdrawal of some reinsurers in 2023. Property proportional reinsurance capacity was mixed, with portions of US business seeing increased capacity and improved terms and conditions, while the market remains tight in Greece, Israel, Turkey and the Middle East, it explains. The retrocession market remained competitive at year-end and is benefiting from oversupply with expanded appetite from existing and new markets to meet demand across all products, it adds. Aon sees a positive outlook for the reinsurance market this year, starting in a strong position with record high capacity of $715bn as of 30 September 2024. This is already $45bn higher than capacity at the end of 2023. Meanwhile, the reinsurance sector remains on course to produce a second year of strong results, despite an active Atlantic hurricane season and a further wave of high-profile secondary peril losses around the world, it continues. “Capital is building quickly from already very strong risk-adjusted levels, and most reinsurers are clearly looking to grow in 2025, at least in short-tailed property and specialty lines,” Aon says. “Even with the further easing of conditions at 1/1, the property catastrophe reinsurance market is priced to produce target expected returns for reinsurers. Capital levels are strong, and reinsurers are more confident in current pricing levels and terms, and remain keen to grow. The industry is now in a strong position in which to expand its offering,” the broker adds.

Softening property reinsurance market across most regions, says Aon

US hurricanes had ‘little impact’ at 1 Jan with market well set to expand offering

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Want to read this article?

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