Rates may continue to harden into Jan 1, 2024 renewal

Reinsurance renewal pricing may continue to harden into the January 2024 renewal as reinsurers and investors continue to shy away from catastrophe risks, analysts at Moody's have said.

“We expect reinsurance pricing to continue to exhibit strength in April and July, the key renewal dates for Japanese and US reinsurance contracts,” Moody's analysts wrote.

But much will depend on capacity, which dwindled for some lines throughout 2022 on reinsurer fears of loss trends, especially secondary perils, a reduction in capital on H1 market losses, continued decline in retrocessional capacity and a dearth of new inflows.

“To the extent reinsurers and investors remain reluctant to increase their catastrophe risk exposures, the hard market for reinsurance is likely to continue into the January 2024 renewal period,” analysts wrote.

January 1, 2023, pricing likely exceeded buyer expectations, Moody's said, when comparing the 1.1 result to its own expectations survey conducted among cedants. Expectation for rate increases had been universal, but only 40% expected property reinsurance pricing to rise more than 7.5%.

In the event, loss-free property catastrophe accounts suffered rate hikes of 25 to 40% in Europe and 25 to 50% in the US, Moody's said of broker reports. Loss-afflicted accounts suffered more.