Despite increases, most reinsurers view property cat pricing as insufficient: Amwins
Despite the rate increases that have already been achieved across catastrophe exposed property insurance and property catastrophe reinsurance, it is the view of most reinsurers that property cat pricing is still insufficient, according to Amwins.
Amwins, the insurance origination and distribution specialist, believes that while some areas of the reinsurance market may soon soften, if they aren’t already, property catastrophe risks is one area set to remain hard.
There have been no dramatic market changes in property reinsurance of late, Amwins notes, but there has been some overall moderation in treaty reinsurance renewals and facultative buying, the company explained.
“Rate increases have continued in property,” Amwins continued, but added that “there are signs that the market may be softening in some specific classes and geographies.”
The mid-year treaty reinsurance renewals were “less contentious” but still some buyers struggled to get the higher limits they were seeking.
“Most accounts could be completed with available capacity, except for higher limits that are no longer available at discount prices,” Amwins explained. “July 1 renewals were also much more organized and orderly, with fewer private placements and improved timing and concurrence around terms and conditions.”
New capacity is helping and Amwins notes that it has seen new capacity come into the market from London and, in particular from Bermuda, as capital looks to seize the current reinsurance market opportunity.
There has been a need to manage exposures carefully for some, in the more challenging reinsurance buying environment and this may persist in property catastrophe risks, it seems.
Amwins said that, “Despite the rate increases of the last four years, most reinsurers still view the current pricing on CAT property risks as insufficient, but additional increases going forward will likely be in the 10% to 20% range with exceptions noted in areas of greater exposure.”
One additional factor worth noting from Amwins outlook for 2024, is the fact facultative reinsurance buying ” remains at unprecedented levels.”
This has led to some reinsurers suffering aggregate issues, as facultative reinsurance premium volume has increased substantially.
Which has led to them being more selective on certain risks, Amwins notes, saying this is especially the case for exposures in Florida, the Gulf Coast and areas of serious convective storm potential.
So, while the reinsurance renewals in 2024 are expected to see more market stability, challenges may still persist for buyers of property catastrophe protection, especially in some specific regions and for perils such as severe convective storms.
Read all of our reinsurance renewals coverage here.
