Risk-adjusted rate increases for the U.S. and Florida property catastrophe averaged 25% to 35% through June 1 and July 1 commercial reinsurance renewals, although the level of increases is slowing, according to a report Thursday from Aon PLC.
Aon said US real estate renewals at mid-year were “orderly, with plenty of capacity, albeit at elevated rates.”
Key to the smooth process was the insurer’s early initiation of negotiations and grasp of reinsurers’ expectations, which in some cases allowed the cedants to make necessary adjustments to reinsurance strategies.
Increased insurance-related security activity also bolstered the renewal process by easing some mid-year demand and supply pressures, Aon said. “Significant new issuance volumes”; in the disaster bond market have put 2023 on track to be a record year, with total issuance exceeding $8.6 billion so far this year.
Holding levels generally increased at mid-year in the U.S. distressed property market after also rising at the Jan. 1 renewals and should now stabilize, Aon said.
Casualty reinsurance markets were “stable, with ample capacity across almost all major industries at mid-year,” Aon said. Beyond the loss markets, “capacity was more limited due to reinsurance companies’ concerns about social inflationary trends. Large international accounts with limits of $100 million or more are under pressure from reinsurers,” Aon said.