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Property Re Rates Up Nearly 11 Percent in Delayed 1/1 Renewals


In a brief report on Jan. 1 renewals published Monday, Guy Carpenter said that its global property catastrophe rate-on-line index rose 10.8 percent.

Improvements on underlying business helped casualty renewals, the reinsurance arm of Marsh McLennan added, also commenting on delays in property renewals and factors impacting property, retro and casualty signings.

Breaking down observations of property reinsurance price movements at 1/1 between loss-impacted and less-impacted accounts, Guy Carpenter said that loss-impacted business saw jumps ranging from 10 percent to 30 percent, while some non-loss-impacted accounts had flat renewals, while others rose up to roughly 7 percent.


According to the reinsurance broker, the 1/1 renewal process was later than normal—lagging up to 14 days past typical timings—for some sectors, property being one of them.

As reinsurers “reassessed underwriting strategies,” the result was a “late and varied price discovery process, said Guy Carpenter Chair David Priebe in a media statement, also noting that the reinsurers took time to evaluate impacts of an array of external forces, such as claim change, cyber threats, core inflation, and social inflation, in addition to the frequency and severity of catastrophe losses.

For property, “inflation was a critical and technical part of negotiations,” according to the report, which says that cedents that were able to validate that inflation adjustments were already well-reflected in their rate modifications and insurance-to-value calculations ultimately experienced minimal additional impact.

Property reinsurance capacity was most available for non-loss-impacted upper layers and more constrained on low layers, aggregates, multiyear and per risk contracts.

In general, reinsurers continued to expand their differentiation of each client’s unique placement characteristics, which include underlying risk, loss experience, claims performance, strength of management, business strategy, perceived adequacy of pricing and structure, and depth of the client relationships.


For casualty business, improvements in cedent’s underlying rates and loss ratios meant better ceding commissions on quota shares, except for cyber. For cyber, Guy Carpenter said reinsurers viewed the underlying rate improvements as an offset to ransomware concerns, resulting in flat ceding commissions. Otherwise quota share ceding commissions ranged from flat to 1.5 points for excess casualty and flat to up 2.5 points for financial lines.

In general, reinsurance appetites tilted favorably toward financial lines while capacity for cyber aggregate placements was the most challenged.

Casualty excess was a different story, Guy Carpenter said, noting reinsurers’ “continued put for margin improvement after years of competitive market pricing.”

The report also comments on the retrocession market, without providing any ranges of price increases—only stating that there was “material variance in pricing depending on loss experience,” which was most evident for aggregate contracts, that buyer retentions increases and that capacity was most readily available “for a price” on occurrence structures.

Constrained retro capacity attracted global reinsurers to the catastrophe bond market in search of multiyear, multi-region and multi-peril aggregate covers, the report said.

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