Guy Carpenter U.S. Property Catastrophe Rate-On-Line Index

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Guy Carpenter U.S. Property Rate on Line Index – this is the proprietary index of US property catastrophe reinsurance Rate-on-Line movements, on brokered excess of loss placements, that has been maintained by Guy Carpenter since 1990. The index covers US property catastrophe renewals. It is updated following January 1st renewals and July 1 renewals reflecting the full year, by calculating the change in ROL year on year across the same renewal base.

Latest commentary from Guy Carpenter

Mid-Year Reinsurance Renewals Commentary

Pressure created by two seasons of pricing decreases, averaging 15 percent on US property catastrophe placements, resulted in risk adjusted pricing moderating. There was a significant amount of new limit placed, particularly on programs covering US wind, including a large purchase from the Florida Hurricane Catastrophe Fund. In July, for the first time over the last three renewal seasons, many markets were in a position of dwindling aggregate for US wind-exposed zones.

“It was hard to imagine based on the two previous years that we would hear a reinsurer reference lack of capacity as a reason for cutting back on a program, but this did occur at times this June and July,” said Lara Mowery, Managing Director and Head of Global Property Specialty for Guy Carpenter. “There is certainly no capacity shortage overall and reinsurance capital has grown once again. However, the combination of a significant increase in limit purchased and margins that have continued to thin, created a dampening on the market’s response to additional rate pressure, particularly with regard to US wind.”

Demand for worldwide property catastrophe coverage has continued to grow and since spring 2014 is up around 8 percent based on current analysis. Increase in demand is primarily due to new entities purchasing coverage and companies using a portion of their savings to enhance coverage, fill in gaps or to provide additional coverage as they expand their business.

“New capital continues to flow into the market and become increasingly embedded in the reinsurance space,” Ms. Mowery added. “This has spurred insurers’ confidence to execute business plans that may require additional limit purchased, such as geographic expansion or line of business growth. The industry is also beginning to assess solutions for some of the larger under-insured or uninsured risk issues, including expansion of flood coverage options and the evolution of cyber coverage.”

  • View the Guy Carpenter Global Property Catastrophe Rate-On-Line Index.
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