Latest reinsurance renewal commentary from Guy Carpenter
The overall impact of catastrophe losses on property rates was muted at the January 1, 2019 reinsurance renewals, but the fourth highest annual catastrophe loss year on record did create questions over pricing adequacy, underwriting strategy and the amount of capital available, says Guy Carpenter & Company LLC, a leading global risk and reinsurance specialist and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC).
In its annual renewal report, the company said potential sector pressure from global catastrophe losses in the second half of 2018 and the continued development of 2017 claims was at least partially offset by plentiful capacity. As a result, its Global Rate on Line (RoL) Index, a measure of change in catastrophe premium dollars paid year-on-year, increased just 1.1 percent despite back- to-back years of major loss accumulation.
Contributions to the Index from the two largest sectors, the United States and Europe/Middle East/Africa (EMEA), increased 2.6 percent and decreased 2.5 percent, respectively, but there was a wide degree of variation within these results depending on account specifics. For some European renewals, the uncertainty around Brexit affected their willingness to use Lloyd’s capacity, but this had little effect on renewal outcomes as additional capital was available. While Japan also experienced significant catastrophe activity, any renewal impact will not be evident until the April 1 renewals conclude.
While upward movement in property pricing was limited to localized activity, the effects on profitability from losses in this sector put pressure on other lines to achieve or maintain self-sustaining levels. As a result, in addition to increases on loss-impacted business, increases on some non-loss-impacted casualty and specialty business were achieved.
* Preliminary numbers.
- View the Guy Carpenter Global Property Catastrophe Rate-On-Line Index.
- View the Guy Carpenter U.S. Property Catastrophe Rate-On-Line Index.