Miller Re has provided an update on the global reinsurance market as of January 1, 2024, highlighting key trends and shifts in the property, casualty, and retrocession sectors.
In the property reinsurance market, a more uniform approach to trading was observed, with a greater focus on technical discussions and underwriting rigor, it stated. The year saw efforts to enhance consistency at contract level, aiming to reduce discrepancies and standardize terms and conditions.
The firm noted that price movements in this sector stabilized significantly compared to the previous year, with moderate increases mainly for non-loss impacted programs, and slightly higher adjustments for those affected by losses.
The property market experienced a notable rebound in capacity, contrasting with the previous year’s constraints. This improvement was attributed to a resurgence of capital in the sector and robust returns for reinsurers.
However, the market still faced considerable losses from catastrophic events such as Hurricane Otis and the Turkey earthquake, which influenced rate adjustments, especially for programs directly impacted by these events.
The retrocession market, meanwhile, saw a late-year increase in capacity, leading to more favorable conditions for buyers, particularly in the mid to upper layers. Miller Re explained that rates in this segment were generally stable or slightly reduced, with the presence of catastrophe bonds and alternative capital playing a significant role.
Casualty reinsurance sector
In the casualty reinsurance sector, capacity remained sufficient, with renewals concluding smoothly once market-clearing terms were established. Although there was pressure on ceding commissions and excess-of-loss pricing, the changes were less pronounced than in the previous year.
Miller Re noted that the market focused on risk adequacy and the effects of economic and social inflation, with adjustments in ceding commissions varying based on client relationships and portfolio performance.
Reinsurance themes from January renewals
Several overarching themes emerged, including cautious investor sentiment due to concerns over climate change, geopolitics, and inflation. Despite these challenges, the sector saw capital growth, primarily through retained earnings and investments in the catastrophe bond market. The impact of inflation and climate change continued to influence market dynamics, prompting adjustments in loss costs and underwriting strategies.
The use of alternative capital, such as insurance-linked securities (ILS) and catastrophe bonds, increased significantly, crossing the US$100 billion threshold for the first time. This trend indicates a growing reliance on innovative financial instruments within the reinsurance industry.
Additionally, a shift in reinsurer appetite was noted, with a newfound focus on the upper segments of catastrophe programs. This change reflects a broader shift in market dynamics and confidence levels among industry players.
The demand for structured solutions and coverage innovations, such as quota shares and multi-year covers, underscored the market’s need for more customized risk management approaches. Political and geopolitical risks also continued to influence the underwriting landscape.
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