2018 was the fourth highest annual catastrophe loss year on record, however its overall impact on property rates was limited, raising questions over pricing adequacy, underwriting strategy and available capital, according to Guy Carpenter's annual renewal report.
Guy Carpenter's Global Rate on Line (RoL) Index, a measure of change in catastrophe premium dollars paid year-on-year, increased just 1.1 percent despite back-to-back years of major loss accumulation.
Potential sector pressure from global catastrophe losses in the second half of 2018 and the continued development of 2017 claims was at least partially offset by plentiful capacity, the report noted.
Two of the most significant contributions to the index came from the US and EMEA, increasing 2.6 percent and decreasing 2.5 percent, respectively. However, there was a wide degree of variation within these results depending on account specifics.
Guy Carpenter added that uncertainty around Brexit affected some European insurers' willingness to use Lloyd's capacity, but this had little impact on renewal outcomes as additional capital was available.
Upward movement in property pricing was limited to localised activity, however the effects on profitability from losses in this sector put pressure on other lines to achieve or maintain self-sustaining levels. Therefore, in addition to increases on loss-impacted business, increases on some non-loss-impacted casualty and specialty business were achieved.
“While the impact on January 1 renewals overall was muted, this was a more challenging environment for some segments than it was a year ago," said David Priebe, vice chairman at Guy Carpenter. "The industry is dealing with questions of pricing adequacy and where and to what degree adjustments might be needed. Finding equilibrium was not always easy and questions remain coming out of this renewal."
Guy Carpenter, Renewals, Reinsurance, Global