Guy Carpenter & Co. has reported that reinsurance rates-on-line fell at the January 1, 2014 renewal in nearly all classes and regions. The reinsurance broker’s global renewal report pointed to “strong balance sheets, relatively low loss experiences and an unprecedented influx of convergence capital” as having “spurred competition and innovation at renewal. These factors led in turn to surplus capacity across most business segments as competition spilled beyond property catastrophe lines.”
The Guy Carpenter Global Property Catastrophe Reinsurance Rate-on-Line Index fell by 11 percent at the renewal. “Much of this was driven by a 15 percent decline in the United States. Property catastrophe pricing also came under pressure in Continental Europe and the United Kingdom at January 1, 2014, where prices fell by 10 percent and 15 percent respectively, with risk-adjusted reductions of up to 20 percent achievable in some cases,” Guy Carp said.
The report also noted that this is the “first renewal in over a decade where all major territories saw pricing move in the same direction, with some isolated exceptions. Germany and some parts of the Nordic region suffered significant catastrophe losses during 2013, causing catastrophe rates for loss-affected programs to rise. Canada also saw pricing increase as severe flood events meant the country experienced its most expensive insured catastrophe loss year on record.”
Lara Mowery, Guy Carpenter’s Global Head of Property Specialty, commented: “It is difficult to think of another time in recent history where multiple factors have come together to support a market so focused on individual client need. There is tremendous innovation driving tailored solutions at reduced pricing to the benefit of our clients.”
In addition the report concludes that “softening market conditions spilled beyond property catastrophe lines at January 1, 2014 as pricing fell in most other business segments. Although the impact was less dramatic outside of property catastrophe lines, price movements across non-catastrophe business showed a general trend of decline as reinsurers deployed more capacity into these lines.
“Casualty pricing was generally flat to down, despite low investment yields due to historically low interest rates and adverse development for some U.S. workers compensation writers.”
Source: Guy Carpenter
Was this article valuable?
Here are more articles you may enjoy.