Reinsurance renewals news

Property insurance rates continue to soar higher for homes and businesses in catastrophe exposed regions of the United States, while coverage issues are increasingly emerging for those high-value buildings in peak catastrophe zones.

The New Zealand Earthquake Commission (EQC), the state-owned residential property disaster insurance entity, is likely to need more reinsurance protection from private markets as new rules are set to dramatically expand the amount of catastrophe risk it takes on.

The severe floods across Europe in July 2021 are estimated to have caused an insurance and reinsurance industry loss of US $11 billion, according to organisation Cresta, while convective storms in June added another US $5.1 billion to the summer loss tally for the continent.

Despite the fact more capital inflow to the insurance-linked securities (ILS) sector is expected and more new start-up capital is expected to launch in traditional insurance and reinsurance, rating agency AM Best does not expect this to affect the chances of additional rate firming happening.

While the momentum behind rate firming in reinsurance has continued to fade so far this year, the direction of travel has been positive and better margins are ahead for the reinsurance sector, according to Fitch Ratings.

The retrocession market failed to harden as hoped for through 2021, with in some cases rapid and material declines in pricing seen, especially in industry loss warranty’s (ILWs’), according to Guy Carpenter’s Sebastian Cook.

The upward trajectory of rates on line will continue at the January 1st 2022 reinsurance renewals, including European accounts hit by losses this year, according to Sven Althoff, executive board member at Hannover Re.

A hurricane Ida industry loss estimate update from RMS has put the National Flood Insurance Program’s (NFIP) reinsurance counterparties and catastrophe bond investors on-watch for potential losses, as the estimate suggests the traditional reinsurance component at-least is likely to attach and face losses.

The California Earthquake Authority (CEA) increased the size of its reinsurance and catastrophe bond risk transfer program by around 4.4% as of the end of July 2021, to reach almost $9.6 billion, but in the short-term future growth of the program seems less certain due to rising exposure and the cost of coverage.

The U.S. Federal Emergency Management Agency (FEMA) is back in the reinsurance market, beginning the process towards a January 2022 renewal of the National Flood Insurance Program’s (NFIP) traditional reinsurance program, alongside which is expected to be a new catastrophe bond as well.