Reinsurers more discerning at mid-year renewals: Willis Re 1st View
LONDON, July 01, 2019 (GLOBE NEWSWIRE) -- Strengthening primary insurance market conditions underpinned improvements to reinsurance prices, terms and conditions at the June 1, and July 1, 2019, renewals according to the latest from Willis Re, the reinsurance division of Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.
Almost all buyers were able to secure the capacity they desired at June 1 and July 1, but differentiation between cedants by reinsurers has increased, particularly based on the accuracy of their previous catastrophe loss estimates. Superior pricing and capacity were available to clients seen as preferred trading partners.
Non-marine retrocession coverage saw the greatest price increases of up to 35% for loss-hit programs, while loss-hit Florida and U.S.-nationwide property catastrophe and per-risk exposures saw prices rise by up to 25%. However, ‘market-standard’ price increases have been displaced by reinsurers’ more discerning approach, creating a wide pricing disparity between different accounts.
In casualty lines, pro rata treaty commissions typically declined, notwithstanding improvements in the underlying terms and conditions for most classes, although the same dynamic of superior pricing for the better performing companies was seen in casualty lines too. Worsening loss ratios and declining reserve redundancy across a number of lines point to the need for continued momentum to ensure sustainable returns.
James Kent, Global CEO of Willis Re, said, “Recent smaller catastrophe losses from perils that are less well modeled allied to continued loss creep from larger events are challenging parts of the market, and causing some reinsurers to revisit their underwriting models. This was most notable in the Florida renewals, where pricing took an upward direction, particularly for cedants seeking new limit.”
Kent added, “Retrocession buyers have also felt the impact of the market’s changing appetite, putting the business models of some buyers under scrutiny as ILS capacity in particular has pulled back — and boosting the opportunity for traditional reinsurance carriers who are less reliant on retrocession capacity. Overall it remains a functional and logical reinsurance market with preferred pricing and capacity for cedants viewed as superior partners.”
About Willis Re’s 1st View renewals report
The Willis Re 1st View renewals report is a thrice yearly publication that includes specific commentary on key trends throughout the world’s major reinsurance classes and regions.
About Willis Re
One of the world's leading reinsurance brokers, Willis Re is known for its world-class analytics capabilities, which it combines with its reinsurance expertise in a seamless, integrated offering that can help clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker's global team of experts offers services and advice that can help clients make better reinsurance decisions and negotiate optimum terms. For more information, visit willisre.com.
About Willis Towers Watson
Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com
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