It follows rate increases in 2022 and 2023
After rate hikes in 2022 and 2023, Howden Re has indicated a reduction in pricing within the property-catastrophe reinsurance market.
It said that the normal range of risk-adjusted property-catastrophe reinsurance rates on-line was -5.5% less than usual.
Its research states that the reinsurance market has been going through a period of adjustment, partially due to high ILS inflows and a resurgence of dedicated sector capital that surpassed the levels saw in 2021. As a result, programmes’ upper capacity increased, which in turn caused lower risk-adjusted rates in the upper tiers.
“In this quickly changing landscape, it is imperative that our clients obtain the best possible coverage. This entails not just locating capacity but also making sure it fits their financial goals and risk profiles, according to Wade Gulbransen, Howden Re’s head of North America.
“To meet these challenges head-on, our focus remains on providing creative thinking along with dynamic placement strategies,” he continued.
The ILS market is becoming more competitive and active, according to the research. The issuing of catastrophe bonds by major carriers in Florida resulted in a rise in supply in higher layers, which in turn drove a notable growth in the assets under capital providers’ supervision.
Following 2023’s impressive performance, some reinsurers shifted their focus to property risks. Several of them recorded some of their best financial performances in decades in terms of combined ratio, return on equity, and economic value added.
The rise in interest in ILS was indicative of a general trend in the market regarding varied alternative risk transfer mechanisms, providing cedents and reinsurers with other options for managing their risks.
Nonetheless, elements like the 2024 hurricane season may put short-term pressure on the market’s rating since a weakening El Niño and a higher likelihood of a La Niña could result in stronger storms, highlighting the inherent volatility of the market and the necessity for greater strategic resilience.
