The reinsurance industry should expect to see fairly stable conditions at the upcoming January 1st reinsurance renewals, with property catastrophe reinsurance pricing anticipated to be somewhere close to flat due to losses from recent hurricanes Helene and Milton not developing as adversely as original forecasts from cat modelers, according to analysts at RBC Capital Markets.
In a new report, analysts explained that in their view, reinsurers’ appetite for writing more property and property cat business has increased throughout the past year, owed in part to increased deployable capacity and profitable combined ratios, which has ultimately resulted in some uptick in competition.
At the same time, analysts expect to see casualty rate increases at 1.1, which will vary by line, but could wind up sitting around mid-single digits.
Analysts also flagged up how social inflation, reserving concerns, and increased severity – particularly in areas like general liability, umbrella, and commercial auto – is causing reinsurers to be “more selective” in deploying capacity towards casualty classes.
Further, terms and conditions should also remain fairly steady at 1.1, analysts added, as reinsurers “want to hold the line on attachment points, limits, and ceding commissions.”
Interestingly, RBC Capital Markets is anticipating for reinsurance demand to remain high throughout 2025 for all renewal periods, as primary insurers look to protect downside risks.
However, the June 1 renewals may end up providing a bit more of a challenge due to the recent hurricane history in Florida.
“Even with the recent hurricanes, reinsurers have generated another year of good combined ratios and ROEs in 2024 despite higher global catastrophe losses,” analysts said.
Adding: “One of the reasons for this is carriers have increased retention levels and many of the losses weren’t severe
enough to reach reinsurance attachment points.”
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