Slight increases in demand are likely through January reinsurance renewals as insurers face heightened risk and volatility and pressure from rating agencies, Aon’s latest Reinsurance Market Outlook says.

It says some global insurers were able to mitigate further impact of COVID-19 losses by effectively increasing property catastrophe risk transfer during the past six months, with capacity renewed in a “relatively orderly fashion” during the spring.

“Increased risk transfer over the past six months has demonstrated the value reinsurance provides to actively trade risks in the market,” Aon says. “Should these dynamics persist, slight increases in demand are expected for property catastrophe through January renewals.”

“Cedents able to articulate portfolio impacts of COVID-19 not only from losses but changing primary market trends will be best positioned for renewals.”

Global reinsurance capital ended June at $US610 billion ($833 billion), just 2% below levels at the end of 2019, after recovering from a fall to $US590 billion ($806 billion) at the end of March.

Insured global catastrophe losses stand at $US54 billion ($73.76 billion) for 2020, compared with $US75 billion ($103 billion) in full-year 2019.

More than 60% of insured losses in 2020 have been caused by secondary perils, and eight of the past 10 years have seen higher economic losses from secondary perils than primary perils, Aon says.