Reinsurers are expected to have held the line on pricing after the smoke clears from the 1 July renewal, consistent with the pricing gains seen at the start of this year.
The run-up to the July 1 reinsurance renewals saw a continuation of the pricing and structural market dynamics that defined the 1/1 renewal period, according to Gallagher Re
Mid-year placements are expected to catch up and align with prevailing market undercurrents felt at preceding renewals, the reinsurance broker said.
While significant increases on a year-on-year basis were seen, renewals were “orderly and rational” with adequate capacity from the reinsurance market available to support client needs.
This resulted in a less-stressed renewal process in most cases. That’s according to Gallagher Re’s ”1st View” renewals report.
- The market has faced a continuation of the pricing and structural dynamics as reinsurers sought to bring terms and conditions into line with those seen at 1 January and 1 April
- New capital entering the market (traditional and insurance linked securities (ILS)) coupled with moderated demand, through increased retentions and limited purchases of additional limit and clearer expectation management by all parties, have led to a more orderly renewal
- The casualty treaty market remained straightforward, with adequate capacity and flat to moderate rate increases, driven primarily by reinsurer comfort with improvements to underlying portfolios
- Strong returns achieved by ILS funds in 2023 to date leading to growing investor interest, and in turn an increase in the overall number of bonds being issued
- ILS attention shifting from traditional property perils to other opportunities, such as cyber and casualty, as the property market begins to move into balance
- Limited signs of completely new reinsurance entities forming, and the trend is one of consolidation into fewer, larger reinsurance entities – which, in the absence of any major losses, points towards pricing stability.
“With the improved terms and conditions available in the reinsurance market, some existing reinsurers are leaning into the hardening market, committing more of their existing capital, as well as any new capital they are raising, to reinsurance,” said Tom Wakefield, global CEO Gallagher Re.
“However, in contrast to other historic hard markets, there are limited signs of completely new reinsurance entities forming and the current trend is one of consolidation into fewer, larger reinsurance entities – which, in the absence of any major losses, points towards pricing stability,” Wakefield added.
Download the full 1st View report from Gallagher Re, here.