قالب وردپرس درنا توس
Home / Insurance / Renewals in June lead to modest increases for reinsurers

Renewals in June lead to modest increases for reinsurers



Reinsurance companies saw modest increases in renewals on 1 June, as markets generally remained well capitalized while the exclusionary language on communicable diseases and cyber exposures became more pervasive and tighter.

The increases were lower than expected, say some observers.

"I do not think reinsurance companies get what they thought they would get" in terms of interest rate hikes, largely due to abundant capacity, says Brian O & # 39; Neill, partner and customer manager for TigerRisk Partners LLC in Tampa, Florida.

Reinsurance executives' consensus "was that increases in the Florida disaster reinsurance rate will fall short of expectations set last year," wrote Meyer Shields, Baltimore-based CEO of Keefe, Bruyette & Woods, in a note

Renewals in Florida will end up on average 5% to 1

0% higher, with increases in loss-making accounts that can be as high as 20% to 30%, wrote Mr. Shields.

Matt Fitzg erald, managing partner, London and US property, accident and specialty, for Gallagher Re, the reinsurance unit for Arthur J. Gallagher & Co., said that the real estate markets were weakest and saw the smallest price increases, with much of the claims sector and specialty markets with increases of up to 10%. The upper end included aviation and cyber, which he described as a tough market.

Cumulative losses from secondary risks, including severe convective storms and wildfires, have begun to affect insurers' lowest reinsurance levels and have caused losses for reinsurers, who have responded by tightening. up on the lower layers.

“Prices continue to rise, albeit at a reduced rate. Modest single-digit increases are the norm, with material velocity pressures on lower, loss-bearing bearings, says Justin Lorence, senior broker in Minneapolis with Lockton Re, part of Lockton Cos. LLC.

Reinsurers' appetites "change" up programs when (they) decrease from the persistent rate of cat losses in lower stocks, "said Lorence.

" Some of the attritional disaster losses leaked into these lower stocks. Tornado, wind, etc. Caused losses that actually began to affect some of these lower reinsurance layers, says Tiger & # 39 ;s O & # 39; Neill. according to their views on risks, says George Carse, CEO, segment manager in Florida, for Guy Carpenter & Co. LLC, part of Marsh & McLennan Cos. Inc.

"The challenges have been on these bottom layers that are exposed to the frequency of secondary hazards," says Mohit Pande, Head of Property Insurance, USA and Canada, at Swiss Re Ltd. in Armonk, New York.

"Insurers have tried to place lower attachments that give them protection against increased frequency. of secondary dangers such as severe convective storms, and this has been met with some resistance from the reinsurance market, ”said Pande.

The reinsurance markets for accidents see interest rate increases in the range of 10% to 15% with respect to social inflation s ersist, said Jessica Wassail, senior broker at Lockton Re in Philadelphia.

"Reinsurance companies continue to pursue risk adjusted interest rate increases on claims / primary liability and surplus loss contracts based on social inflation," says Mark Braithwaite, senior broker, accident market, for Lockton Re in New York he added that “customers who have achieved significant interest rate increases of 20% or more on their original portfolio by 2020 and track similar 2021 see improved reinsurance terms. "

Insurers are facing not only rising prices but also increasingly restrictive policy language," say sources.

There continues to be pressure on infectious clauses that are introduced in most renewals as well as austerity. of language, said Gallagher Re & # 39 ;s Mr. Fitzgerald.

“There is a great deal of concern about systemic risk right now. Obviously, pandemic is one area; cyber is another, "said Mike Van Slooten, head of business intelligence for Aon PLC's reinsurance solution department in London.

" There is some concern there and you can expect reinsurance companies to tighten up the language they set. Van Slooten sa.

"Real estate reinsurance agreements move towards excluding silent cyber and gaining more clarity about what is covered when it comes to cyber," Swiss Re & # 39 ;s Mr. Pande.

In the real estate markets, the growing demand for cyber-exemptions is "almost ubiquitous", according to Lockton's wife Wassail. In reinsurance for accidents, some reinsurances request new exemptions from infectious diseases, but requests for cyber exemptions are not as ubiquitous as on property, she said.

Negotiations on treaty policy language on pandemic developments were "laborious", but a "significant amount of work has been done to create a more defined market standard for the exclusion of communicable diseases," said Guy Carpenter, Mr Carse.

Although prices generally rose everywhere , they were tempered by abundant capacity, using what Mr. Shields called "abundant ILS capacity. "

" There is a lot of activity in cat bonds. It has been a fairly active year, "says Aon's Mr Van Slooten.

Disaster bond issues in the annual and fourth quarters set both records in 2020 and strengthened capacity in both the reinsurance and retrocession markets.

Traditional reinsurance companies have also added capital and some new players have entered the market, says O & # 39; Neill.

Renewal talks went smoothly overall, but the lack of face-to-face meetings was a factor, observers said.

"Reinsurance is a relationship business and people like to "face each other and shake hands," says Van Slooten.

"Ultimately, this is a relationship company and not being able to see each other is challenging and not ideal, but business has taken place smoothly and without unnecessary delay," says Swiss Re & # 39 ; s Mr. Pande.


Source link