The H1 2024 reinsurance renewals indicated a changing market driven by rising demand for protection. According to Guy Carpenter, this period showed a dynamic trading environment.
During the mid-year 2024 renewals, property programs without losses saw easing prices despite higher demand. Most property reinsurance placements were completed early or on time.
However, risk programs faced scrutiny due to concerns about large loss frequency and severity.
Guy Carpenter explained that the property catastrophe reinsurance market saw some “significant” price adjustments for loss-impacted programs in peak zones, whereas loss-free accounts in other geographies actually trended flat to down.
Globally, mid-year property catastrophe reinsurance rates remained mostly flat or decreased slightly. Higher layers of non-loss impacted programs saw risk-adjusted rates decrease by 10% or more, signaling a moderating yet robust pricing environment.
Guy Carpenter’s preliminary mid-year US Property Catastrophe Rate on Line Index remained nearly flat compared to the previous year.
Dean Klisura, President and CEO of Guy Carpenter, noted that well-positioned clients achieved better pricing in this cautious trading environment. However, unsettled macroeconomic conditions and geopolitical factors are shifting risk appetites. Guy Carpenter aims to provide clients with insights to differentiate and find optimal solutions.
Well-positioned cedents achieved greater concurrency and pricing consideration in this positive but still cautious trading environment
Dean Klisura, President and CEO of Guy Carpenter
In the casualty market, renewal outcomes varied by sublines and reinsurance types. Quota share outcomes depended on adverse development levels, while US-exposed general liability and excess/umbrella placements faced pricing pressure. Financial lines saw reduced ceding commissions, while the cyber market showed active renewals with improved terms for buyers.
In the first quarter of 2024, most retrocession buyers aimed to secure similar limits as the previous year. The second quarter saw increased demand from existing buyers and the return of historical buyers (see TOP 50 Largest Global Reinsurance Groups).
Guy Carpenter also highlighted a record first half of the year for catastrophe bonds, with Q1 and Q2 being the most active quarters in the market’s history.
David Priebe stated that the reinsurance industry responded to significantly increased demand in 2024, exceeding many expectations.
Improved reinsurer returns and capital positions are increasing capacity in several sectors. Guy Carpenter aims to strategically support clients in this new risk era.
The reinsurance renewal was shaped by deteriorating loss experience, a lack of new capital inflows and also increasingly challenged primary insurance and retrocession markets.
While reinsurance supply was seen as in the main sufficient to meet increasing demand, apart from in some of the most constrained areas of the market, Guy Carpenter said that renewal outcomes have varied significantly by geography, line of business and cedent, with their performance one of the key differentiators.
Losses and the changing view of risk has been a particular driver for this renewal, the broker said, with reassessments of risk resulting in some drawbacks of capacity after derisking exercises or complete withdrawals of capacity.
by Yana Keller