Jan. 1 reinsurance renewals were "disappointing" and hardly offered any hope of more positive reinsurance pricing and profitability in future half-year renewals despite the fact that disaster losses in 2017-2018, the credit rating agency A.M. Best Co. Inc. said Friday in a report.
"Most in the industry felt that when the losses over the last 15 months were raised, the renewals on January 1, 2019 would provide a well-deserved departure from insufficient pricing adjustments, but that didn't happen."
While some reinsurance companies went away from poorly-priced companies, others, especially larger players, continued to focus on market share and were willing to write insufficiently priced risks, best-mentioned in reports.
The brightest place for the January delays was in the real estate tax business, which is largely governed by third-party asset managers, where pricing increased by 1
Otherwise, renewal prices were most flat, in some cases varying from 5 % to 10%, mainly in US property disaster, which "turned out to be a decline for most," Best reported.
Loss frames, including those hit by California fires, saw the largest price increases, by as much as 20%, Best says.
"Given the big losses in recent years, reinsurers are increasingly realizing the importance of risk of fire errors and are focusing more on the definition of fires that occurred during the negotiations."
But the rate of renewal was flat up to 10% for non-disaster-landed accounts, while the rates for lossless programs were also flat with no more than 5% increases for cat risks and for non-catfish pricing prices further, best said.
Non-life insurance and special reinsurance also saw some small price increases, Best says. "Companies understand that prices are at unsustainable levels and that they need the pace to increase on a number of lines – such as commercial auto – after several years of losses and reductions," Most reported. "
Labor Compensation Teams have seen single-digit price increases as a result of primary interest rates and a higher frequency of large losses," the report says.
While third-party capital providers seem to be more focused on returns, Best said it is expected that investors will continue to invest in third party capital as the adjustment to traditional capital continues, guaranteeing "an abundance of capacity for the reinsurance segment."