In its annual market report, Howden indicates a return to relative stability in the re/insurance market. This shift follows a tumultuous period culminating in what the company referred to as “The Great Realignment.” Over the past year, market conditions have seen an improvement, with a balance struck between supply and demand.
Howden’s report, “A New World,” underscores nuanced conditions in the re/insurance sector, mirroring new macroeconomic and geopolitical influences and adjusted loss expectations. Despite these complexities, the market’s improved supply dynamics suggest a change in sentiment. This is evident in pricing momentum across various market segments, leading to enhanced performance and a greater willingness to deploy capacity.
The renewal process occurred under favorable supply conditions, coupled with a focus on underwriting discipline. This combination resulted in stable and orderly renewals, with adequate supply to meet growing demand.
Risk-adjusted pricing remained mostly unchanged overall, though variations were observed in certain regions and lines of business, reflecting specific loss experiences. In 2024, terms and coverage scope became focal points, leading to overall improved concurrency. Additionally, capital inflows played a significant role in creating more favorable market conditions.
In the retrocession segment, the absence of significant losses in 2023, positive developments post-Hurricane Ian, and increased capital inflows at the end of the year, led to stable retrocession renewals on January 1, 2024. This contrasted with the previous year’s challenging renewal period. Risk-adjusted retrocession catastrophe excess-of-loss rates remained stable at the beginning of 2024. However, competition for higher program layers led to favorable outcomes for cedents, with some risk-adjusted reductions.
The direct and facultative (D&F) reinsurance market supported clients renewing programs following a year of robust growth and favorable loss experience. Demand for D&F catastrophe cover remained high due to various factors, including higher rates on original business. After significant pricing adjustments in the previous year, 2024 saw stable rate movement on a risk-adjusted basis.
Global property-catastrophe reinsurance rates experienced a moderate average increase of 3% at the start of 2024. This was significantly lower than the 37% increase recorded in 2023. The rebound in the ILS market contributed to this trend, along with increased competition for higher-attaching layers.
In the US, January 1, 2024, renewals reflected improved supply dynamics, with reinsurers supporting terms and pricing levels similar to the previous year, it was highlighted. While capacity remained limited for lower layers, increased competition for mid-to-top layer risks led to more attractive pricing options, Howden noted.
The casualty sector at the start of 2024 was marked by sufficient capacity and disciplined market approaches. Discussions around economic and social inflation impacted underwriting decisions, reflecting individual account performance and prior-year developments, the report claimed.
David Howden, founder & CEO of Howden, emphasized the escalating risks in the current global environment, from climate change to geopolitical instability.
“This is the moment for brokers and carriers to step up and apply our intellectual and financial capital to find creative solutions that safeguard the insurability of assets exposed to a myriad of risks, including climate change, geopolitical instability, and rapid technological advancements. Offering innovative products that meet clients’ changing needs is the route to long-term relevance, and new possibilities,” Howden said.
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