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Reinsurers have adopted a rational rating approach at the April 01 renewal, with price increases of up to 25% targeted towards loss-affected contracts and programmes, according to Willis Re.
In the global reinsurance brokerage’s latest ‘1st View’ report, it said that the rate increases were balanced by flat renewals for loss-free classes and programmes. Continued high levels of market capitalisation from both traditional reinsurers and the insurance-linked securities (ILS) markets were behind the rational pricing responses by reinsurers.
The report added that some buyers sought to purchase greater capacity both on an aggregate or occurrence level, and that the market was able to respond with capacity being constrained only when price was an issue. Many buyers believed that long-term relationships remained more important than the modest rate reductions offered in some non-catastrophe, loss-free classes. In Japan, ILS markets remained a small but unchanged force, with some increase in appetite from a few funds in a handful of areas, Willis Re said.
“At a time when some participants in the global reinsurance market are promoting the need for substantial, across-the-board improvements in pricing, reinsurers delivered considered, rational price adjustments – a sign of the market’s stability and maturity,” said James Kent, global CEO of Willis Re. “As the global reinsurance market looks to address the current supply/demand imbalance, being able to demonstrate a stable and rational base plays an increasingly important role when developing and promoting solutions to new buyers and core clients.”
