Asia Pacific reinsurance buyers have been facing the same renewal pressures as seen at the beginning of the year, at April 1st, but the supply-demand dynamic has moderated somewhat, according to Aon Reinsurance Solutions APAC CEO George Attard.
The April 1st reinsurance renewals for Asia Pacific clients have been “proceeding in an orderly fashion” Attard explained.
Overall, “The reinsurance market finds itself on a more sustainable footing following a turbulent 1/1,” he said.
Although the supply-demand dynamics seen at the January reinsurance renewals have played out for April 1st, but this is to a more moderate degree, Attard believes.
However, some areas of the market have seen more significant price increases than others, with property catastrophe risks a clear area of rate escalation in Asia Pacific at these April renewals, it seems.
Attard said, “Broadly speaking, pricing for natural catastrophe covers in APAC is set to increase markedly at April 1, with retention levels also increasing.
“However, local factors have helped mitigate the effects of the hard reinsurance market.”
Demand has been relatively flat, he said, with inflation one driver as it has been lower than in other regions, particularly Japan, with supply relatively stable.
Attard continued to say, “After the dust settled on January 1, reinsurers re-established their risk appetite for natural catastrophe exposures, and while there are no new entrants to the market, many established players have since increased their participation in the APAC region, reassured by improved pricing and conditions. This, coupled with insurers’ willingness to increase retentions, has put the market on course for a pragmatic outcome to the renewal.”
In Japan, which is likely the main renewal of focus for the insurance-linked securities (ILS) market at April 1st, rate increases have generally been seen to be lower than at January 1.
“Rate increases for earthquake and windstorm at April 1 notably lower than those seen in the US and Europe at January 1,” Attard said,
While, “In line with the global trend, aggregate covers and catastrophe exposed proportional reinsurance came under increased pressure,” he explained.
Looking ahead, Attard forecasts that the mid-year reinsurance renewals for Asia Pacific, where large Australia and New Zealand towers are placed, could also be more challenging than a year earlier.
“All eyes will now turn to mid-year property catastrophe renewals in APAC, in particular Australia and New Zealand, which have both experienced unusually large catastrophe events.
“Although likely to be challenging with continued pressure on pricing and retention levels, an orderly mid-year renewal is anticipated for the APAC region given pricing changes implemented in 2022 and evolving supply-demand dynamics,” Attard concluded.
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