Global reinsurance giant, Hannover Re, anticipates prices and conditions to remain on a sustained stable level for treaty renewals in property and casualty reinsurance as at 1 January 2025 and anticipates a balance of supply and demand in most markets.
In a statement, Hannover Re says that in the various rounds of treaty renewals during 2024, prices and conditions continued to improve in some areas, while in others they stabilised on the previous year’s level.
Asia Pacific
Hannover Re also forecasts developments in different regions worldwide in treaty renewals as at 1 January 2025. For Asia-Pacific, Hannover Re says that the forecast is :
In China and India, given the increasing frequency and severity of natural catastrophe events in the first half of the year, insurers’ profitability is expected to come under pressure. As in other markets, cedants could look to further raise their retentions to counter potential increases in reinsurance costs.
In Southeast Asia, Japan and Korea, primary insurers will likely further increase their retentions in response to the higher costs of reinsurance coverage.
Australia and New Zealand have experienced a quiet 2024 so far compared to the previous year. Hannover Re will strive for further growth and will look to support the market in its focus on loss mitigation and access to coverage.
Hannover Re says that after the significant increases recorded in prior years, some primary insurance markets are seeing modest price reductions. The reinsurer therefore still considers it appropriate to place an emphasis on non-proportional reinsurance covers.
Nat CAT
For 2025, Hannover Re anticipates to see the following trends on the major markets for natural catastrophe business:
Since inflation remains high and the average loss severity is increasing, Hannover Re anticipates rising demand for reinsurance capacity. Even though it is still too soon to fully assess the impacts of the 2024 hurricane season on the reinsurance market, the market environment should again remain attractive in 2025.
Japan: The reinsurance market in Japan showed considerable discipline in the 1 April renewals, with market demand holding stable. The earthquake risk in the region was once again evident in 2024, even though no appreciable reinsured losses were incurred. Substantial flood and typhoon losses as well as hail events in the past two years similarly underscored the need to factor all climate-related perils into the pricing of Japanese catastrophe business.
Australia and New Zealand: After many years of major natural catastrophe events, the region has escaped unscathed this year. Multi-peril risks remain, however, and insured values are rising, driven in part by inflation. This will likely continue to fuel demand for catastrophe coverage, while Hannover Re will concentrate on offering such protection at commensurate prices and with adequate retentions.