Latest reinsurance renewal commentary from Guy Carpenter
The Guy Carpenter U.S. Property Catastrophe Rate on Line Index increased by 35 percent for January 2023 through July 2023 renewals, with the broker saying it reflects the largest increase in risk-adjusted US catastrophe reinsurance pricing 17 years.
At the January 2023 renewals, US property catastrophe reinsurance rates increased by 30.1% to deliver a new all-time-high for this Index.
Guy Carpenter said that the renewals at January 1st 2023 were particularly challenged and while the US property cat reinsurance business is not the main focus, steep increases suggest further rate momentum at the mid-year renewals that have a significant contribution to this Index.
The most recent low for this U.S. Property Catastrophe Rate on Line Index was in 2017, at the end of the soft market and since when rates have risen consistently each year.
Since 2017, the cumulative rise of this Index has now reached roughly 97%.
“Looking past the renewal of January 2023, it’s important to remember that we have been at crossroads before,” Dean Klisura, President and CEO, Guy Carpenter said.
“In prior reinsurance cycles, significant catastrophe loss events such as Hurricane Andrew, the attacks of September 11, 2001, and Hurricanes Katrina, Rita and Wilma were the catalysts for market corrections that preceded new capital entering the sector,” Klisura continued.
Adding, “It is imperative that the industry stay focused on providing workable client solutions, thorough coverage and balanced pricing for the long-term sustainability of cedents and markets. Our top priority is ensuring that clients are getting the coverage and clarity they require in order to conduct their business.”
Then, mid-year renewals helped the Index increase further for 2023, to reach a 35% increase over the January to July 2023 property catastrophe reinsurance renewals in the United States.
“In the US, property catastrophe reinsurance risk-adjusted rate increases were on average the highest in 17 years, with loss-free accounts generally up +20% to +50%,” Guy Carpenter said.
* January through July numbers.
- View the Guy Carpenter Global Property Catastrophe Rate-On-Line Index.
- View the Guy Carpenter Regional Property Catastrophe Rate-On-Line Index.
The Guy Carpenter ROL index is a measure of the change in dollars paid for coverage year on year on a consistent program base. The index reflects the pricing impact of a growing (or shrinking) exposure base, evolving methods of measuring risk and changes in buying habits, as well as changes in market conditions. Unlike risk-adjusted measurements, the index is not dependent on the model or method used to measure the amount of perceived risk in a program, which can vary widely.