Reinsurers have put the case for further reinsurance price rises at the January renewals as the industry prepares for annual negotiations following the Rendez-Vous de Septembre event in Monte Carlo.
Hannover Re says ongoing geopolitical uncertainties, the increasing frequency and severity of natural catastrophe losses as well as inflation rates and social inflation support further increases and improvements in terms and conditions.
“We have achieved significantly more adequate prices and conditions during this year’s renewals. However, these improvements are not sufficient in view of the still challenging risk situation,” Hannover Re CEO Jean-Jacques Henchoz said.
Swiss Re also expects a continuation of recent market trends, given the environment in which reinsurers are operating, but Property & Casualty Reinsurance CEO Urs Baertschi told a media briefing that it was too early in the renewals process to provide specifics.
“This process is just starting here during Monte Carlo and then we’ll pick up speed over the next few weeks,” Mr Baertschi said. “In general, our expectation is that what we’ve seen over the last 12 to 18 months around the rebalancing of the risk sharing, and the price adequacy, we expect that to continue.”
Munich Re says the broader economic environment remains “fragile”, inflation is still a factor and higher levels of natural catastrophe activity have continued, with global insured losses this year likely to again surpass $US100 billion ($155 billion).
Member of the Board of Management Thomas Blunck says traditional reinsurance capacity dropped last year compared with 2021, partly due to rising interest rates, but while a recovery is expected, there has not been a surge in inflows.
“We don’t have a massive capital inflow and that means the market dynamics are not changing,” he said. “The market dynamics we have seen recently in the renewals, I would expect them to prevail also going forward.”
Aon said at a media briefing that while 2023 has become another active catastrophe year, many of the losses have come from secondary perils covered by primary insurers.
“The bulk of those losses coming from secondary perils are not impacting the reinsurance market at this stage, and that is something you can clearly see in the reported results of the reinsurance sector,” Aon Reinsurance Solutions Head of Business Intelligence Mike Van Slooten said.
The broker’s “Ultimate Guide to the Reinsurance Renewal” says there’s increased appetite for property catastrophe business at middle to higher layers, but challenges remain at lower levels.
“In the absence of a significant catastrophe event, the January 2024 renewals are expected to be more orderly than the prior year, with supply and demand largely in balance,” Aon says.