General Insurance Article - More of the same for 1 April reinsurance renewals

 Despite above-average insured natural catastrophe losses in 2020, most property catastrophe excess of loss programs renewing at 1 April delivered a largely loss-free year. Some property per-risk programs were impacted by the worsening frequency and severity of non-catastrophe losses, which led to pricing increases and program restructuring. Aggregate covers particularly saw greater focus on structure than on price, as reinsurers worked to distance these accounts from attritional losses. Long-tail lines, and particularly casualty excess of loss, faced increased pricing pressure from reinsurers coping with low investment returns.

 Pandemic and silent cyber exclusionary language followed the approach set at 1 January, through a combination of standard clauses and, from some reinsurers, customised language written to align with original policy wordings.

 Demand from insurance-linked securities (ILS) investors proved strong, particularly for capacity made available through publicly traded bonds, which helped to moderate overall price increases.

 James Kent, Global CEO of Willis Re, said: “The market landscape has not seen much change since 1 January and consequently the important 1 April renewals saw more of the same between reinsurers and their customers. Market results for 2020 illustrate the challenges faced by the global reinsurance sector of reduced investment income, declining prior-year reserve releases, rising COVID-19 loss reserving, and increased volatility in the frequency and severity both of natural catastrophes and man-made losses. However, reinsurers’ 2020 results, when adjusted for COVID-19 claims reserves, have shown encouraging improvements in underlying combined ratios and buyers’ immediate concerns over capacity availability and pricing have been allayed leading to an orderly renewal.”

 Download the full report: 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.