Reinsurers have adopted a rational rating approach at the 1 April 2019 renewal with price increases of up to 25% targeted towards loss-affected contracts and programmes. These rate increases were balanced by flat renewals for loss-free classes and programmes, according to the latestfrom Willis Re, the reinsurance division of Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.
Continued high levels of market capitalisation both from traditional reinsurers and Insurance-linked securities (ILS) markets were the key to reinsurers’ rational pricing responses.
Some buyers sought to purchase greater capacity both on an aggregate or occurrence level and the market was able to respond with capacity being constrained only when price was an issue. Meanwhile, for many buyers, long-term relationships remained more important than the modest rate reductions offered in some non-catastrophe, loss-free classes. ILS markets remained a small but unchanged force in Japan, with some increase in appetite from a few funds in a handful of areas.
James Kent, Global CEO of Willis Re, said: “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”.
: The Willis Re 1st View report is a thrice-yearly publication including specific commentary on key trends throughout the world’s major reinsurance classes and regions.