Reinsurance renewals news

At the January 2021 reinsurance renewals, property rate increases were seen to be at the lower end of expectations, while property retrocession rates also didn’t firm as much as anticipated, broker Guy Carpenter has confirmed.

Australian primary insurance group IAG has successfully renewed its catastrophe reinsurance tower to provide it with the same $10 billion level of occurrence coverage as it had for the prior year, citing only “modest” increases in rates at the renewals.

Close to US $20 billion of new capital was raised by the global reinsurance market and new start-up entrants in 2020 and there is more to come in 2021, as the need for capital persists, according to David Flandro of HX Analytics.

The insurance-linked securities (ILS) market and in particular catastrophe bonds demonstrated their resiliency around the key 1/1 January reinsurance renewals, with significant capital attracted to new cat bond issues, Guy Carpenter has said.

The January 2021 reinsurance renewals were a more complex affair, which resulted in a trend to more non-concurrency in placements, according to broker Guy Carpenter. Which we believe suggests a need for the reinsurance market to embrace modernisation in the renewal process sooner, rather than later.

The expected capacity shortage in the retrocessional reinsurance market did not materialise to the degree anticipated at the January 2021 renewals, resulting in a market that still firmed considerably, but did not experience the hardening many had been hoping for.

Issues related to the potential for insurance-linked securities (ILS) collateral to be trapped, because of uncertainty over the COVID-19 pandemic and its potential losses for the insurance and reinsurance industry, have largely been postponed until after the January renewals.

Global risk-adjusted property catastrophe reinsurance rates-on-line rose by an estimated 6% at the January 2021 reinsurance renewals, according to analysis by Howden Broking.

The resilience of the global reinsurance market “shone through” at the January 2021 renewals, which broker Willis Re says were less onerous than feared for ceding companies.

The January 2021 reinsurance renewals are approaching completion and it looks as if third-party and collateralized sources of reinsurance and retrocession capacity have played a key role again, with capital markets sources of funding growing across the marketplace.