Aon reported that conditions in the U.S. property catastrophe reinsurance market continued to favor buyers at the mid-year renewals.
Despite rate reductions, portfolio returns remained strong and appealing for reinsurers and investors.
According to Aon’s report, capacity was abundant and more than sufficient to meet insurers’ increased demand.
Traditional reinsurers sought growth while alternative capital intensified competition, particularly in the middle layers of catastrophe programs. Demand rose significantly, with total limits purchased expected to increase by over 10%.
Reinsurance buyers generally experienced a more competitive reinsurance market at the July 1 renewal compared to recent years, with capacity available even where demand increased.
This was driven by insurers reassessing wildfire exposure following the January Los Angeles fires and by additional limits tied to the depopulation of Florida Citizens.
Aon noted that pricing remained the main area of competition, but reinsurers also displayed greater flexibility in offering expanded coverage and adjusting program structures.
Terms and conditions were largely stable, with most non-concurrencies from the hard market resolved. However, coverage for loss-impacted risks attracted heightened scrutiny.
Reinsurers became more willing to offer broader protections, such as aggregate and subsequent event covers, particularly for loss-free and well-performing portfolios.
Outcomes varied by segment, performance, and loss experience, though they were generally favorable.
The report also highlighted that catastrophe risk pricing was more differentiated than in previous renewals, with reinsurers quoting and supporting firm orders based on individual underwriting results.
This environment of increased supply and demand allowed insurers to diversify and expand their reinsurance panels by incorporating new reinsurers and engaging a wider range of counterparties.
While U.S. national and global insurers continued to attract significant interest, Floridian and regional insurers also benefited from more competitive pricing at the mid-year renewals.
