Reinsurance prices are set to continue to rise and retention levels will also increase in upcoming renewals following more challenging market conditions in the wake of Hurricane Ian and Australian flooding, Swiss Re says.

The majority of Australian insurers renew reinsurance programs at the start of July but Head of Property & Casualty Underwriting, Asia, Australia and New Zealand Mark Senkevics says market drivers affecting pricing and retentions will be felt at both the January renewals and into the next mid-year period.

“It’s often been said that Australia’s in the eye of the storm when it comes to climate change and we’re seeing that play through,” Mr Senkevics tells insuranceNEWS.com.au. “I would sense that the reinsurance market will see some significant change in the coming year.”

Since the reinsurance rendezvous event in Monte-Carlo in September, the global reinsurance market has experienced Hurricane Ian, while loss estimates for the Australian flooding earlier this year have continued to climb, he said while attending the Singapore International Reinsurance Conference (SIRC) this week.

“The people I’ve spoken to here at SIRC are suggesting that the structure of the market needs to change in order to make it sustainable,” he said.

Reinsurers are also affected by reduced retrocession availability, with Hurricane Ian contributing to trapped capital in collateralised markets, while inflation pressures remain a persistant factor across the insurance sector.

Most insurers in Asia renew at the end of the calendar year, while Japan and India are focused on April 1.

More than 2000 delegates attended the Singapore event, as meetings on the sidelines presented the opportunity for opening gambits before negotiations reach crucial stages.

“There’s only two months to go, so there’s not a lot of time, and there’s a sense that this will be a very late renewal for the Asian markets,” Mr Senkevics said.

Reinsurers have also seen an increase in secondary peril claims in motor across Asia, related to hail and flood in particular, while liability has been relatively stable, but with social inflation starting to emerge as an influence in some markets across the region.

In Australia currently, insurers and reinsurers are keeping a close eye on rising claim numbers from the latest flooding catastrophe in southeast Australia, as the country enters the typically higher-risk summer catastrophe season.

“We don’t know the absolute outcome just yet, but the thing I can say is that it makes people more nervous,” Mr Senkevics said. “We have a third La Nina year, and at the very beginning of the declaration of that third La Nina year, we have a substantive flood event.”