Aon Benfield says hurricane reinsurance continues to harden
Aon Benfield has released its July Reinsurance Market Update report, which examines the trends experienced in various lines and territories at the July 1 renewals.
The report states that the US reinsurance market for hurricane exposed programs continues to harden, while renewals of catastrophe exposed programs outside of the US remained firm and were influenced by regional loss experience and reinsurer competition to participate in regional programs.
In Australia, property catastrophe pricing increased by 10 to 15% overall, and by 5 to 10% on loss-free layers, as a result of large losses arising from the Queensland storms in 2008 and the Victoria bushfires earlier this year. Conversely, in Malaysia, property excess of loss rates decreased by 5 to 15% due to increased capacity and competition.
While 1st July remains a significant renewal date in the United States, the hardening that was expected caused many programs to be marketed and placed prior to 1st July. Pricing changed at a level consistent with 1st June renewals – increasing 10 to 15 percent.
Bryon Ehrhart, Chief Executive Officer of Aon Benfield Analytics, said: “The 1st July renewals continued to reflect the hardening of rates for programs that include U.S. hurricane risk. Other major catastrophe aggregate zones held firm or increased slightly reflecting the limited opportunity to improve upon already accretive economic terms held by most cedents. Reinsurers have generally done a superior job of managing capital through these turbulent times and have continued to renew the core capacity required by our clients.”
In the Asian market, excluding China and Japan, there were no major changes in coverage, exclusions and conditions in property catastrophe lines. Whereas in the UK, rate increases of up to five percent were recorded in property catastrophe lines.
Meanwhile, in Latin America, property excess of loss prices rose by up to 5%, with broadly stable terms and conditions and higher levels of retention in certain programs.