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Interest rates on reinsurance for property and liability were still rising



Most reinsurance rates will continue to rise with the January 1 renewals as losses and inflation put pressure on property reinsurers and concerns about rising court decisions also raise liability rates.

Some high levels of reinsurance cover, however, are smaller affected by frequent losses, can see unchanged renewals, experts say.

So-called social inflation affects different lines of responsibility, and reinsurance coverage for cyber-liability can also face difficult investments, they said last week during interviews at the annual meeting of the American Property Casualty Insurance Association in Denver. The event, where insurers, reinsurers and brokers gather, is seen by many as the informal start of talks leading to reinsurance renewals on January 1

.

On the real estate side, lower fixing cover stocks and aggregate cover rates – all subject to frequent small and medium-sized events Has suffered losses over the past five years, says Rob Bredahl, CEO of TigerRisk Partners LLC in Summit, New Jersey.

"They will be very difficult to place," says Mr. in Bredahl. However, price increases are difficult to predict because attachment points can also increase when coverage is restructured.

Injuries caused by the increased frequency and severity of these small and medium-sized events have resulted in higher loss activity over the past five years compared to the "previous several decades" , says Keith Wolfe, President of US P&C at Swiss Reinsurance Ltd. In New York. "We believe that there has been a gradual change, and that is why we are seeing losses creep up."

"Most of the tariff adjustments in real estate have really been based on losses," he said. Pande, head of real estate guarantees, USA and Canada, at Swiss Re, said "Real estate seems to be in people's minds quite a bit. The key theme has been the increase in disaster loss activity."

Discussions about the extent and timing of forest fires have also developed, Pandit said. "There has been some tightening of the language around the radius and hourly limits used to define a wildfire," he said.

Inflation has become a problem for property risks, with material and construction costs rising.

"We see this manifests itself in much greater loss compensation for properties that have been damaged or destroyed, "Wolfe said.

" There has been a huge increase in the cost of everything, "Bredahl said. In addition, higher labor costs are causing concern.

This pressure may does not diminish any time soon, said Mr. Wolfe. "I see no reason why it is not at least 12 to 24 months for us to experience these disturbances in the supply chain, as in ultimately leads to higher loss costs. "

Both loss activity and the response to inflation will be key. differentiators for cedents during renewals, along with variables such as underlying price movements and exposed hazards, said David Priebe, president of Guy Carpenter LLC in Norwalk, Connecticut,

has increased by about 10%, said Bredahl. Higher anchorages, which have not suffered losses in recent years, should be roughly unchanged at renewals in January, he said.

plenty of capacity, prices are attractive in relation to the traditional market ", and a record volume of new issues is expected by the end of the year, Bredahl said. the sector continues to see losses and underlying primary interest rate hikes, sources said.

"What we see in the broader American accident area is that public responsibility has been affected to a significant amount by social inflation. We continue to see the trend go up in terms of large jury awards," Wolfe said, citing as examples heavy commercial trucking on the liability side and a recently completed $ 1 billion jury award from Florida.

On August 20, a jury in Nassau County, Florida, awarded damages in an unlawful death in an accident with a truck worth more than $ 1 billion, after five days of testimony and four hours deliberation in Melissa Dzion v. AJD Business Services and Kahkashan Carrier according to local news reports. The price included a $ 900 million penalty.

" industry, "Wolfe said.

Trends that have pushed up price increases on the claims side, including financial lines, have continued, he said. [19659002] Increased claims on ransomware affecting insurance companies with cyber liability have begun to affect the reinsurance layers, Wolfe said.

"Cyber ​​is expected to remain challenging in January. 1 in light of increased and more serious ransomware attacks, "said Mr. Priebe.

There have been" significant "changes in pricing, product structure and capacity allocation to deal with conditions in both the insurance and reinsurance segments and loss-making assumptions for cyber risk have reviewed to reflect the impact of the current claim activity, he said.

Meanwhile, contract language regarding covid-19 exclusions has evolved to be more accurate, sources said.

After the emergence of covid-19, "it was great focus on the exclusion of infectious diseases, "said Mr. Priebe." Over the past 18 months, versions of the language have gained widespread acceptance, leading to significantly improved negotiation times and more orderly placements. "

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