Reinsurers maintained pricing momentum as rates moderated
A range of factors from Q1 2021 helped moderate global reinsurance rate increases.
During the most recent renewal periods, global reinsurers maintain pricing momentum built during the first quarter, according to Willis Re, which cautioned there were signs capacity supply was beginning to outpace demand.
In addition to maintaining pricing momentum, Q1 2021 saw improved results for premium volume and combined ratios, which helped lift the market during 1.6 and 1.7 renewal periods.
Continued rate increases on underlying portfolios as well as improved pricing drove premium growth, Willis Re reported. However, gains were moderated by the first quarter’s generally low catastrophe losses, rising underlying reinsured premium volumes, positive investment trends, and the strong economic recovery from COVID-19.
“The global reinsurance market is moving towards an equilibrium. Reinsurers, backed by resilient investors delivering an increasing capital base, are robust and well-positioned to provide the long-term support their clients expect and need,” James Kent, global CEO of Willis Re, said in a release. “These clients recognize the value of a stable and broad reinsurance marketplace so have continued to grant rate increases in most instances.”
Additionally, during the most recent renewals periods, reinsurers had to accept firm order terms below initial quotes, according to Willis Re, which noted this further indicates the market is nearing parity.
“However, we are approaching the top of a cycle, which we believe is unlikely to precede a precipitous and damaging decline in rates,” Kent said. “Instead, the market is likely to retain its discipline in order to maintain the balance it has achieved over the past couple of years, especially with the full picture of losses from COVID-19 and prior year liability lines still to emerge.”
While the entirety of the pandemic’s impact is yet to be seen, concerns regarding inflation and COVID-19-related loss developments had no impact on pricing as property renewals saw flat or modest rate growth. Casualty risks saw more regular pricing and coverage changes than on the property side, but a “gentle” upward trend was seen, according to Willis Re.
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