Global reinsurer Hannover Re said that it expects P&C reinsurance pricing to rise again, while terms and conditions are expected to improve further, at the upcoming January 2024 renewals.
The company noted in an announcement made at the Monte Carlo Rendez-Vous this week, that the reinsurance market remains attractive in non-proportional reinsurance, while proportional reinsurance is now benefiting from improved prices in some primary insurance business lines.
The reason Hannover Re is bullish on P&C reinsurance pricing and terms comes down to trends such as, ongoing geopolitical uncertainties, the increasing frequency and severity of natural catastrophe losses, still high inflation rates and social inflation, the company said.
Insurers and reinsurers have been paying higher losses and Hannover Re expects the “long-standing trend towards higher expenditures to be sustained.”
“We have achieved significantly more adequate prices and conditions during this year’s renewals. However, these improvements are not sufficient in view of the still challenging risk situation,” explained Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re.
“Adequate pricing is a prerequisite for us to offer the best possible reinsurance capacity. As we want to grow with our clients and help closing protection gaps, we will also put an emphasis on innovation in order to allow our clients to transfer risks both through traditional reinsurance and tailored solutions.”
“Over the course of the year, we have seen increasing exposures from man-made losses. We expect this trend to continue, so that, amongst others, political or cyber risks will increasingly become the focus of future renewals. At the same time, we will keep an eye on the more frequently occurring secondary natural catastrophe perils,” added Sven Althoff, a member of Hannover Re’s Executive Board with responsibility for property and casualty reinsurance. “Thanks to our outstanding risk and capital management, we are optimally placed to reliably support our clients even in this challenging market phase.”
For North American catastrophe business, Hannover Re expects higher reinsurance demand at renewals in 2024 and beyond.
The company said that it will continue to be conservative in Florida though, “unless reinsurance terms and conditions improve appreciably.”
In Europe too, Hannover Re said that it “anticipates stronger demand for reinsurance capacity,” in natural catastrophe business, with losses and sustained inflation set to drive the market environment at renewals.
Moderate reinsurance demand growth, on the property cat side, is forecast for Japan, as clients factor in their growing exposure and price inflation.
For Australia and New Zealand, Hannover Re expects more catastrophe reinsurance rate increases in 2024, with sustained high inflation set to be a driver for demand as well.