Reinsurance renewals news

A misalignment of priorities has led to some last minute challenges for buyers of retrocession at the January 1st 2022 reinsurance renewals, as ceding reinsurers have in some cases been left disappointed with capacity they had targeted drying up.

Insurance origination and distribution specialist Amwins has highlighted how unusual the hard market in property risks is at this time, especially for catastrophe exposed properties, as rather than a lack of capital driving rates higher, it is risk aversion that is driving harder rates.

This year, 2021, has been the most costly on record for the German insurance industry, as industry losses reached around €12.5 billion, with the largest contribution coming from the summer flooding.

For those in the collateralised reinsurance and insurance-linked securities (ILS) market, the recent damaging tornado outbreak and severe US weather event is most likely to manifest through challenges in renewing aggregate covers and quota share arrangements, we hear.

After the deadly impacts of the tornado outbreak just about a week ago, the United States has been hit by another historic weather event in recent days, as an “explosive cyclogenesis event” struck the Upper Midwest, which adds to ramifications for the reinsurance renewals.

In 2022, there is a strong chance Florida’s Citizens Property Insurance Corporation buys more private market risk transfer in the form of reinsurance and catastrophe bonds through its Everglades Re program, although the Board has directed a review of risk transfer versus pre-event financing to see how money can be saved.

As participants in the insurance, reinsurance and insurance-linked securities (ILS) industry grapple to understand the extent of their possible exposure to the severe convective storms and tornadoes of recent days, AM Best has warned that loss events like this will drive a re-examination of aggregate reinsurance pricing and supply.

Deployable (or not trapped and available to put to work) capital in the insurance-linked securities (ILS) sector is estimated to have fallen to around $70 billion to $75 billion, according to analysts at KBW.

Capacity to support aggregate retrocessional reinsurance renewals at 1/1 is “extremely scarce” according to analysts at KBW, who after a second day of meetings with Bermudian companies concluded that significant rate increases are going to be required for this segment of the market.

Global reinsurance giant Munich Re has said that reinsurance alone cannot absorb the systemic risk that climate change brings, citing the need for public private partnerships and government intervention.