The reinsurance market is structured to manage significant events, such as hurricanes Helene and Milton, says Eric Andersen, President of Aon, a global insurance and reinsurance brokerage.
Hurricane Helene, the sixth named storm of the 2024 Atlantic hurricane season, became the fourth to make U.S. landfall on September 27, 2024. It struck west-southwest of Perry, Taylor County, Florida, as a Category 4 storm with sustained winds of 140 mph.
Not long after, Hurricane Milton followed, hitting Southwest Florida on October 9, 2024.
In Aon’s Q3 2024 earnings call, Andersen discussed the favorable conditions for reinsurance heading into 2025. “The reinsurance market is constructed to handle events like Helene and Milton. That’s why it exists. It’s doing great work. There’s money flowing into the area for reconstruction. So it’s all good on that front,” Andersen noted.
He acknowledged rising client concerns around pricing and attachment points, reflecting market shifts over the last three years.
Going into the fall, clients applied pressure around pricing and attachment points due to significant program changes as reinsurers adjusted their positions
Eric Andersen, President of Aon
Following the recent hurricanes, he highlighted ongoing discussions about potential impacts on pricing. “There are conversations happening around whether these events will flatten pricing or slow the rate of descent. However you want to phrase it. And I would say it’s early,” he added.
Andersen said that there remains ample capital within the market. He also noted that Europeans, in particular, are pushing for price decreases and attachment point relief.
“As negotiations gain structure over the next eight to ten weeks, clients will likely continue to seek rate or attachment point relief. We’ll see where it turns out,” he concluded.
Fitch Ratings has released the results of reinsurance market survey, which saw 81 re/insurance market participants provide their expectations for the January 2025 reinsurance renewals.
Fitch believes reinsurers are well positioned to maintain their strong property-catastrophe profitability, even with prices easing, and expects underlying margins to remain close to their 2023–2024 peak in 2025.
Capital buffers and reserve adequacy have strengthened, helped by record profits in 2023 and 1H 2024.
Market estimates of property catastrophe losses in 1H 2024 are just over $60 bn, significantly higher than average, driven by medium-sized peril events, including several convective storms in the US.
Most of the losses were absorbed by primary insurers due to higher attachment points, a situation that will persist in 2025 as reinsurers stay cautious on secondary peril exposure. Climate change brings more frequent and extreme weather activity, making it harder for reinsurers to price catastrophe risk.