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Reinsurers raise rates, exclude Russia and Ukraine: Brokers



(Reuters) — Global insurers face a test in 2023 when reinsurers raise rates on key lines of business by as much as 200% from Jan. 1 and pull back from underwriting risk in Russia, Ukraine and Belarus, reinsurance brokers’ reports showed on Tuesday.

Reinsurers insure insurance companies, and January 1 is the key date for reinsurers to renew and adjust the pricing of 12-month policies in light of major economic or geopolitical changes, such as the war in Ukraine, which broke out last February.

Reinsurers have suffered heavy losses from the conflict and from natural disasters such as Hurricane Ian in Florida, which broker Howden described as the second costliest natural disaster ever in terms of insured losses.

“The sector is experiencing its most acute, cyclical price increases since the 2001

-2006 period, if not earlier,” said David Flandro, head of analysis at Howden in a report.

Reinsurers are reducing their exposure to hurricane risk, with U.S. property reinsurance rates rising as much as 150% in the worst-hit areas on Jan. 1, Gallagher Re said in a separate report.

Aviation reinsurance rates, hit hard by hundreds of stranded planes in Russia, rose by as much as 200%, Gallagher Re said.

Hurricane Ian and other natural disasters caused an estimated $115 billion in insured losses globally last year, well above the 10-year average of $81 billion, reinsurer Swiss Re estimated last month. Climate change is partly to blame for the increased losses, industry sources say.

Any rate hikes requested by reinsurers are likely to be passed on by insurers to their business customers, risking making insurance more expensive and harder to buy, industry sources said.

The market has also added exclusions, meaning from January 1 “it is very difficult to find cover” for Russia, Ukraine and Belarus, Gallagher Re International chairman James Vickers told Reuters.

Some insurance companies have already backed away from providing cover in these countries due to the risk of sanctions or excessive losses.

Without reinsurance, insurers are likely to be even more reluctant to provide coverage for the region, industry sources say. Marine insurers have already said they are pulling out as a result.

Gallagher Re, Howden and Guy Carpenter said this year’s renewal discussions between reinsurers and insurers had been particularly anxious and some terms had been agreed at the last minute.


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