Property disaster reinsurance charges are rising: Man Carpenter – Enterprise Insurance
Later than usual on January 1, reinsurance renewals began to make a clear distinction between loss-impacted and non-loss-impact programs as capacity was limited in lower strata hit by catastrophic losses as well as in retrocession markets, according to a report by Guy Carpenter & Co. LLC Mondays.
In the real estate markets, the loss-neutral business was generally flat, rising 7%, while the loss-bearing business rose 10% to over 30%. The capacity is "sufficient … with more market appetite for non-lossy upper strata" and more limited for the lower strata, especially if they are lossy.
The total annual damage forecast by Guy Carpenter rose to over $ 100 billion, including an estimated damage of nearly $ 30 billion for Hurricane Ida. Guy Carpenter's online global real estate disaster index rose 10.8% year over year.
In the liability lines, capacity was generally adequate, but results varied by line, with the financial lines being the most challenging for reinsurers' biggest appetites and overall cyber coverage. Continuous increases in the primary tax rates in all liability lines contributed to increasing the quota increases in the assignment commission from a flat rate of up to 1.5 points for excess liability insurance and a flat rate of up to 2.5 points for financial lines.
A "challenged" sidecar market resulted in several insurance-linked securities managers pulling out of capacity and helping limit retrocession capacity, although the catastrophe bond market had a record year when in 2021 45 bonds with a limit of more than 11.5 billion US dollars were put on the market.
Guy Carpenter described the process as "neat," he said, "the renewal process in some sectors, including real estate, was later than normal and up to 14 days behind typical timelines for the period."
The weighted average combined ratio of the Guy Carpenter Reinsurance Composite improved by 4.7 points to 98.7% in the first nine months of 2021 and is expected to be below 100% in 2021, compared to 103.4% in 2020 as a whole. Guy Carpenter and on Best estimate of total dedicated reinsurance capital of $ 534 billion, up 2.8% from year-end 2020.
“The changing nature of risk fundamentally affects how reinsurers view prices and capacity allocations. It is clear from the January 1 renewals that the strategies are adapting to these factors, ”said Dean Klisura, President and CEO of Guy Carpenter.