The reinsurance industry saw rate reductions in the April 1 reinsurance renewals that ranged from flat to mid-single digit reductions, an improvement on the low double digit range seen a year before, according to broker Willis Re.
In its new renewals report, titled Willis Re 1st View April 1, 2017, the broker said that risk-adjusted rate reductions on short tail classes continued to moderate while international buyers achieved slightly larger reductions as compared to US and Lloyd’s buyers.
According to the report overall limits purchased have not reduced, and some have increased, as more buyers seek additional protection, whilst retentions have remained largely stable.
Willis Re also claims that capital markets have maintained the aggressive posture and are now often prepared to price more competitively for peak zone catastrophe risk. This erosion in the margin on catastrophe business puts additional stress on traditional reinsurers.
As a result, reinsurers are trying to address pricing in non-catastrophe classes. In the US, the poor results in automobile business, both commercial and personal lines, and in excess workers’ compensation, provide examples of classes where reinsurers are seeking improved terms.
"As reinsurers look to the rest of this year they can draw comfort that in many cases the reductions are slowing and unbridled competition is abating as the managers face the buffers of tighter regulation, better pricing analytics and transparent shareholder expectations," said John Cavanagh, global CEO of Willis Re.
Reinsurance renewals, Willis Re, Rate reduction, John Cavanagh