Guy Carpenter Global Property Catastrophe Rate-On-Line Index

Guy Carpenter Global Property Rate on Line Index – this is the proprietary index of global 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 all major global catastrophe reinsurance markets. It is updated following January 1st renewals each year by calculating the change in ROL year on year across the same renewal base.

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Latest commentary from Guy Carpenter

January 1 Reinsurance Renewals Commentary

This Index has risen by 5% January 1st 2020, reflecting the price increases achieved by reinsurers at renewals.

This is a more significant move than seen a year ago, when the Index only rose by just over 1%, but lower than seen at the January 2018 renewals, when the Index rose by 5.3%.

Guy Carpenter explained that the property catastrophe reinsurance market saw some “significant” price adjustments for loss-impacted programs in peak zones, whereas loss-free accounts in other geographies actually trended flat to down.

With this Index weighted towards peak zone perils at the January renewals, the slight rise seems to have been driven more by the loss impacted accounts, than the market as a whole and certainly does away with the idea that the market is broadly harder after this renewal.

The broker said that the renewal was shaped by deteriorating loss experience, a lack of new capital inflows and also increasingly challenged primary insurance and retrocession markets.

While reinsurance supply was seen as in the main sufficient to meet increasing demand, apart from in some of the most constrained areas of the market, Guy Carpenter said that renewal outcomes have varied significantly by geography, line of business and cedent, with their performance one of the key differentiators.

Losses and the changing view of risk has been a particular driver for this renewal, the broker said, with reassessments of risk resulting in some drawbacks of capacity after derisking exercises or complete withdrawals of capacity.

Guy Carpenter calls the January 2020 renewal market “asymmetrical”, as certain classes whose performance remained positive and profitable often resulted in flat renewals, or in some cases a modest rate decrease.

Conversely, the areas of the market that have been more strained saw market corrections, some significant.

The most pronounced reinsurance rate increases were locally felt in specific regions or markets, Guy Carpenter explained, driven mainly by successive years of losses, deterioration in performance and changing perceptions of risk.

* Preliminary numbers.

The Guy Carpenter ROL index is a measure of the change in dollars paid for coverage year on year on a consistent program base.  The index reflects the pricing impact of a growing (or shrinking) exposure base, evolving methods of measuring risk and changes in buying habits, as well as changes in market conditions.  Unlike risk-adjusted measurements, the index is not dependent on the model or method used to measure the amount of perceived risk in a program, which can vary widely.

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