Improved Florida cat reinsurance renewal conditions expected for June 1: MMC CEO

Early signs suggest that the Florida catastrophe reinsurance renewals at June 1st 2024 will see improved conditions for cedents, as capital has flowed in and reinsurer appetites have recovered, according to Marsh McLennan CEO John Doyle.

Speaking yesterday during the Marsh McLennan earnings call, Doyle highlighted an improving marketplace for the clients of his firm’s reinsurance broker Guy Carpenter.

The recent April 1st reinsurance renewals saw increased capacity and reinsurer appetite, which the broker expects will positively influence the June reinsurance renewals as well in 2024.

“Reinsurance market conditions remain stable with increased client demand and adequate capacity,” Doyle explained.

He noted that, “In the April renewal period, US property cat reinsurance rates were flat, with some decreases for accounts without losses,” while “Loss impacted accounts averaged increases in the 10 to 20% range.”

Adding that, “I think both markets continued to stabilise, on average, in the quarter. And again, I would remind everyone, it’s a collection of markets, not a single market. That stabilisation is good for our clients and in some cases a better market has led to increased demand in both insurance and reinsurance.”

Dean Klisura, CEO of Guy Carpenter went into some more detail, saying, “Market conditions are stable, but we’re definitely seeing increased client demand to buy additional property cat limit, particularly at the top end of programmes. That was very pronounced throughout the first quarter, at 1/1, through the quarter, and certainly that trend continued on April 1st.”

Adding that his teams are seeing, “Strong capital inflows into the reinsurance market, driven by strong reinsurer returns, double digit returns in 2023.

“Reinsurer appetite is increased for property cat, there’s an inflow of capital and capacity, competition at the top end of programmes, it’s been good for both buyers and sellers in the marketplace.”

Looking ahead to the mid-year, Doyle explained, “Early signs for June 1 Florida cat risk renewals point to improve market conditions for cedents, increased reinsurance appetite for growth should be adequate to meet higher demand.”

Which is already being seen in early placements for the mid-year and the catastrophe bond market.

Reinsurance capacity levels are expected to be more than adequate, while differentiation will continue and loss impacted accounts are still likely to see the greatest chance of increases, it appears.

However, Marsh McLennan CEO Doyle also commented that, “I would also say that insurers and reinsurers are cautious about that rising cost of risk environment that I mentioned as well. And so, while again a stabilising market is better for our clients overall, I don’t expect that relative stability to change anytime soon, given some of the rising cost of risk issues that the insurance community is confronting today.”

This “relative stability” suggests that the appetites for risk may not increase so significantly at the lower-levels of reinsurance towers, which are again likely to prove the most stable of all the layers placed at 6/1 and 7/1 renewals.