There was a much smaller variance in property catastrophe quotations during the mid-year property reinsurance renewals in Australasia, compared to 2023, as reinsurers have been relatively accepting that they have reached levels of long-term price sustainability, according to Gallagher Re, one of the largest global reinsurance brokers.
In its “First View – Balance Maintained” for July 2024, Gallagher Re says that pricing discipline was still evident throughout the quoting and firm order stages though influenced by the level of capacity offered with increased shares generally only offered if pricing is perceived to be technically adequate.
The majority of buyers achieved relatively flat property CAT renewals with some risk-adjusted decreases available on higher layers due to both reinsurer competition and a slight shift downwards in minimum rate online levels.
At the same time, property catastrophe retentions have generally been held unchanged in dollar terms by most buyers after the significant changes reinsurers achieved last year.
Other features noted about the mid-year property reinsurance renewals include:
- Reinsurers’ views on prepaid reinstatements on property CAT programmes have softened albeit there is now a market consensus that these need to be appropriately loaded compared to pricing available for paid reinstatements.
- Per risk covers remain challenging, although reverse two risk warranties have assisted in attracting new capacity and reducing reinsurer pricing.
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There remains limited appetite from reinsurers for new aggregate covers with these either expensive or coming with relatively restrictive terms and conditions (and/or only part placed).
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Appetite remains limited for new proportional programmes with commission terms offered allowing for significant reinsurer profit margins.
Australia – Casualty reinsurance
In Australia, casualty reinsurance renewals were stable, with ongoing and strong support for those programmes with perceived price adequacy.
Inflation was still being priced in by reinsurers, however, there was a consensus that both buyers and reinsurers are generally dealing with their exposure to inflation appropriately.
Exposure to PFAs continued to be a topic for investigation by reinsurers; however, reinsurance exclusions were not applied where exposure was considered low or where original underwriting guidelines were considered adequate.
Reinsurers were once again focussed on aggregate exposure to Cyber; however, adequate coverage was available for buyers.
Buyers’ appetite for casualty catastrophe remains strong with some further embedding protection with additional coverage.