Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Reinsurance pricing firming, especially property catastrophe: Towers Watson

Reprints

The Jan. 1 reinsurance renewal period is “on the firming side of stable,” according to an analysis Towers Watson & Co. released Tuesday.

A series of factors, including reinsurers' exposure to losses, the impact of Risk Management Solution Inc.'s version 11 U.S. hurricane model, continued low interest rates and “overall competitive pressures” helped move Jan. 1 renewal rates for U.S. property/casualty reinsurance premiums anywhere from down 5% to up 5%, Towers Watson said.

However, the analysis, “P&C Insights: An Inflection Point for the P&C (Re)Insurance Industry,” noted that costs for loss-affected property catastrophe business increased considerably more.

"We found many companies did not choose to buy additional cover in response to RMS version 11, as exposure change and actual losses drove prices to a greater degree than the model change, with reinsurers using blended results and proprietary (probable maximum loss) approaches," John DeMartini, leader of Towers Watson's catastrophe risk management practice and U.S. property reinsurance specialty practice, said in a statement. “Underwriters, by and large, used last year's quotes and, in many cases, even for loss-free programs, pushed for increases in excess of 20%.”

For casualty renewals, Towers Watson found that reinsurance rates were a point or two on either side of flat.

Looking ahead, Towers Watson “projects that supply and demand factors will continue to support a moderate shift in reinsurance renewal pricing trends and that several factors, both event- and finance-driven, could accelerate hardening market conditions.”

The factors include significant and/or unexpected natural catastrophe losses, regulatory and legislative changes, and another global financial crisis.

Towers Watson also said it expects firming pricing on noncatastrophe-exposed property reinsurance and continued firming on catastrophe-exposed property reinsurance.

Read Next