The renewals of US focused reinsurance programs and treaties at April 1 were more orderly than those seen at January, but the rate increases for catastrophe risk exposed towers were still significant, ranging from 30% to 100%, according to Gallagher Re.
Some layers, particularly the first layers of catastrophe exposed reinsurance towers, have been particularly difficult to place, the broker noted, with reinsurers keen to move up in towers.
For some carriers, particularly the more thinly capitalised and Floridian insurers lacking surplus in 2023, the upcoming mid-year renewals could prove very challenging to renew their lower layers of reinsurance, it seems.
Catastrophe loss free reinsurance programs saw rate increases ranging from +30% to +50%, Gallagher Re explained in its latest 1st View renewals report.
But for those towers that have been catastrophe loss affected, rate increases at April 1st have ranged from +50% to +100%, Gallagher Re says, which for some will have been further significant increases on top of those already experienced last year.
On US treaty reinsurance renewals at April 1st 2023, “Overall, the market was more orderly than it was at January 1, with great clarity around available capacity, terms and conditions,” Gallagher Re explained.
Continuing to explain that, “With regard to pro rata, some cedants with less profitable programs had to take greater net retentions. There was also increased focus on embedded catastrophe coverage.
“First layers of risk excess and cat programs were particularly challenging to place as reinsurers looked to move up programs. Accordingly, many buyers increased net positions via co-participations, annual aggregate deductibles, or fixed retention increases.”
Secondary perils have remained in focus for US catastrophe reinsurance renewals, with some reinsurers still seeking to restrict coverage to just US hurricane and earthquake perils.
Another interesting observation is that pricing on top layers of US reinsurance towers came under pressure at April 1st, as, “reinsurers substantially increased their minimum premium requirements in response to their own cost of capital,” Gallagher Re noted.
Reinsurers are also being selective, as well as choosing to support their long-term partners, it seems, by reserving nationwide, multi-peril capacity for core clients and renewal lines, Gallagher Re noted, making them “more inclined to review new opportunities on a region or peril specific basis.”
Read all of our reinsurance renewals coverage here.
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