Rates rise in April reinsurance renewals, focus shifts to Australia

Reinsurance pricing at the April reinsurance renewals is “set to increase markedly” as attention now shifts to mid-year negotiations involving Australia and New Zealand, Aon Reinsurance Solutions Asia Pacific CEO George Attard says.

Retention levels are also increasing for Asia Pacific natural catastrophe covers, but Mr Attard says local factors have helped mitigate the effects of the hard reinsurance market compared to the January experience.

The January renewals are dominated by the US and European markets, while the effect of demand-supply dynamics has been more moderate in the April outcomes, when Japan is the main focus. Inflation rates have been lower in Asia, while supply has been relatively stable.

“As we close off the April renewals, all eyes will now turn to mid-year property catastrophe renewals in APAC, in particular Australia and New Zealand, which have both experienced unusually large catastrophe events,” Mr Attard says in a LinkedIn post.

“Although likely to be challenging with continued pressure on pricing and retention levels, an orderly mid-year renewal is anticipated for the APAC region given pricing changes implemented in 2022 and evolving supply-demand dynamics.”

Mr Attard says that after the dust settled on the January renewals, reinsurers re-established their risk appetite for natural catastrophe exposures.

“While there are no new entrants to the market, many established players have since increased their participation in the APCA region, reassured by improved pricing and conditions,” he says.

“This coupled, with insurers’ willingness to increase retentions, has put the market on course for a pragmatic outcome to the renewal.”

Brokers in January described the renewals at the start of the year as challenging, gruelling and complex.

A Reinsurance Market Dynamics report from Aon said it was the most challenging January 1 renewal in a generation as the market underwent a fundamental shift in pricing and risk appetite, especially for property catastrophe risk. High losses in recent years were capped by Hurricane Ian in late September.