The results from our second global reinsurance market survey reveals a more positive sentiment towards pricing ahead of the upcoming January 2020 renewals.
Artemis has again collaborated with traditional reinsurance focused sister-site, Reinsurance News, to test the temperature of the global reinsurance market ahead of the January 1st renewals and beyond.
After consecutive heavy loss years for both traditional players and the insurance-linked securities (ILS) sector, exacerbated by a disappointing rate response in 2019, reinsurance industry participants are more positive heading into the 2020 renewals.
As shown by our survey results, which includes responses from hundreds of identifiable industry participants, the large majority of which either make or have input to reinsurance buying decisions, most lines of business are expected to experience positive rate movements at 1/1.
Looking specifically at the global property catastrophe space, and a significant 91% of survey respondents said that prices are likely to be flat to up 10%+ at the Jan 2020 renewals, with the majority of these (41.8%) expecting rate improvements of flat to up 5%.
Just over 26% expect global property cat rates to increase by between 5% and 10% at 1/1, while 8.2% expect rate rises of 10% or more.
Just under 15% of survey respondents expect global property cat rates to remain flat at 1/1 2020, while 7.4% expected rates to be flat to down 5%, and 1.6% said that rates are likely to fall by more than 5%.
In contrast, less than 60% of respondents to the 2018 edition of the survey said that global property cat rates would be flat to up 10% or more. Almost 30% expected rates to be flat, a quarter anticipated increases of flat to up 5%, 3.7% said rates were likely to rise by 5% to 10%, and just 1.6% said rates would increase by 10% or more.
Overall, more than 40% of respondents to the survey last year expected rates to be flat to down in the global property cat arena, with 31.6% expecting flat to down 5%, and 8.5% expecting declines of more than 5%.
The difference year-on-year is significant and reflects just how far rates had fallen during the prolonged soft market and how disappointing the increases were in both 2018 and 2019.
While the reinsurance sector is certainly firming, company CEOs, executives and analysts have noted that it’s still not a hard market, and remains very challenging and competitive. However, as the market moves towards the January renewals, clearly sentiment has taken a more positive tone.
The potential of more underwriting returns will be welcomed by both traditional players and the alternative or insurance-linked securities (ILS) space.
How much rates improve at 1/1 remains to be seen, but issues surrounding the trapping of collateral are certain to provide more stimulus to rate discussions.
The full results of our second global reinsurance market survey provide a useful test of the temperature of the industry, offering insight on market sentiment and expectations as we move towards the January 2020 reinsurance renewal season.
We hope our readers and other interested parties find the results enlightening and useful in making their strategic decisions for the renewal season ahead.
The full results of our latest survey are freely available from today and we’re happy to discuss them with any industry participants. We’re interested to hear your thoughts.
We’ll also be analysing the full reinsurance market survey results over the coming weeks on both Reinsurance News and Artemis.