UK-based Howden Broking Group Ltd. said Thursday that June 1 reinsurance renewals saw continued rate tightening, with risk-adjusted property/catastrophe rates up 33% on average within a typical range of 25% to 40%.
Capacity shortages continued to drive increased pricing, as loss-making programs increased by more than 40% as memories of Hurricane Ian’s losses remained fresh, Howden said. Higher coverage tiers also saw increases of over 40% year-over-year for both earthquake and wind protection.
Wade Gulbransen, head of North America, Howden Tiger, said in a statement that the increases marked a “once-in-a-generation market.”
The lower tiers also remained challenging, with cedants increasing retentions and, in some cases, changing issuance guidelines, according to Howden.
Macroeconomic factors including financial market volatility, inflation and geopolitical tensions also weighed on renewals, Howden said.
“Although dedicated reinsurance capital has recovered somewhat from the lows at the start of the year, challenges remain with historically high catastrophe losses, increased geopolitical and financial risks and increased connectivity converging to create a climate of heightened risk aversion.”; David Flandro, head of industry and strategic consulting, Howden Tiger, said in the report.
The challenging market conditions had parties out as early as January, with placements starting in March, Howden said.
“In summary, as of June 1, risk-adjusted property/catastrophe pricing has reached new highs with several factors changing the risk management landscape. Low – albeit recovering – levels of dedicated capital remain,” Howden said.