Understanding the Impact of Rising Property Cat Reinsurance Rates
According to a research that was released on Thursday by Aon PLC, risk-adjusted rate increases for property catastrophe covers in the United States and Florida ranged between 25% and 35% via commercial reinsurance renewals on June 1 and July 1. The degree of increase is reducing, however.
According to Aon, the property renewal market in the United States at the halfway point of the year was “orderly, with ample capacity, albeit at elevated prices.”The insurer’s early start to discussions and grasp of reinsurers’ expectations were essential to the smooth process. This allowed the cedents, in some circumstances, to make necessary revisions to their reinsurance strategy, which contributed to the overall success of the endeavor.
According to Aon, increased activity in insurance-linked securities helped the renewal process by easing some of the demand-supply pressures that were present towards the middle of the year. The “significant new issuance volumes” in the catastrophe bond market have put 2023 on course to be a record year, with total issuance already topping $8.6 billion year-to-date. This puts 2023 on track to break the record that was set in 2022.
According to Aon, retention levels should now be able to stabilize after increasing at the beginning of the year and again on January 1 for policy renewals. This trend was observed in the U.S. catastrophe property market.
According to Aon, the casualty reinsurance markets were “stable” at the mid-year renewals and offered “ample capacity” across practically all of the key lines of business. In markets where losses were more than expected, “capacity was more constrained than usual due to reinsurer concern for social inflation trends.” According to Aon, reinsurers are putting pressure on large foreign accounts with limits of $100 million or more because there has been some emergence of large losses.
Have something to say about this story? Let us know in the comments below.
