Reinsurance rate momentum stalls for loss-free renewals
Reinsurers in the Australian market are mostly taking a client-by-client approach as global mid-year renewals saw plentiful market capital slowing the momentum in reinsurance price rises for property-catastrophe accounts. Willis Re says in a new report that global renewals have accounts that have been unaffected by losses dissipating. Reinsurers in Australia have focused on supporting key relationships, but some have started to reduce capacity “where rates are perceived to be inadequate”. Australian loss-hit account price gains are around 0-5%, with slight reductions reported for some loss-free renewals. Willis Re says most loss-free property accounts in the benchmark US state of Florida were flat, but some saw rate declines of up to 7.5% as competition was heightened. However, Florida loss-hit accounts saw gains of up to 7.5%. Surplus capacity, benign catastrophe activity so far this year and stabilised loss estimates for last year have driven the renewal trends and are behind a “new normal” in the market, Global CEO James Kent says in the broker’s 1st View report. “For traditional risk carriers, the imperative to react to the emerging new market normal and adjust their business models is intense,” he said. “A number of traditional carriers are well advanced in their plans to reduce their costs, including difficult decisions around headcount.” Globally, reinsurance lines beyond property catastrophe have seen varied renewal results. Pricing firmed in areas such as US medical malpractice, commercial auto and international directors’ and officers’ cover. But competition remains intense and pricing continues to favour the buyer on lines offering better profitability.