Rates rise in Australia’s reinsurance renewals
Australian mid-year reinsurance property renewals have seen rate increases of 10-25% where catastrophe losses have been experienced, while the global market seems to be moving towards an equilibrium on terms and conditions, Willis Re says.
Some Australian clients have raised property market retentions due to a lack of reinsurer appetite for cover attaching at low levels, or in response to poor loss experience, the reinsurance broker says in a First View Report.
But the June 30 renewal period has been “orderly” with no material changes to wordings or conditions.
Catastrophe loss-free renewals saw rate increases of up to 5% while other loss-hit business increases were around 5-15%.
In casualty, rates have maintained an upward path, particularly for loss-affected accounts or those with lower retentions.
Reinsurers continued to be more selective and reduced shares, or lapsed business they saw as unprofitable, but this didn’t translate into lack of capacity.
“The trend of reinsurers seeking deeper understanding of underlying risk also continued,” the report says. “This was especially true for risks exposed to silent cyber and to a slightly lesser extent, COVID-19.”
Willis Re Global CEO James Kent says reinsurers showed a willingness to maintain January and April pricing momentum at the June/July renewals.
“To an extent they were successful, though there are increasing signs of capacity supply outweighing demand,” he said.
“The desire to increase top-line revenue has not yet undermined underwriting discipline, and classes of business and portfolios with poor results attracted much less capacity. This was particularly notable in the Florida renewals.”
Concerns about COVID-19 had limited impact on the renewals, with ultimate loss development still unclear.
Mr Kent says environmental, social and governance issues are becoming more prominent, although concrete action in terms of underwriting approaches is limited “other than on specific coal and other heavy fossil fuel related facultative reinsurance”, where a growing number of reinsurers are scaling back or withdrawing.