Strong balance sheets, relatively low loss levels and an influx of convergence capital has resulted in global property catastrophe reinsurance rates falling an average of 11% for business renewing on Jan. 1, 2014, Guy Carpenter & Co. L.L.C. said in a report.
According to the reinsurance brokerage's “Global Property Catastrophe Reinsurance Rate-On-Line Index,” an average 15% drop in property catastrophe reinsurance rates in the United States largely drove the overall decrease.
Property catastrophe rates also fell an average of 15% in the United Kingdom and declined 10% in Continental Europe. Decreases up to 20% were achievable in some cases, according to the report.
However, in some areas of Germany and the Nordic region that were affected by storms and flooding, loss-affected business saw rate increases, according to the report. Rate hikes also were seen on loss-affected business in Canada.
Although the most dramatic rate decreases were seen on property catastrophe business, other reinsurance lines of business also saw decreases as reinsurers sought to redeploy capital outside of property catastrophe lines, among other things, according to the report.
Average rates for casualty reinsurance were flat to down slightly, the report noted.
“It is difficult to think of another time in recent history where multiple factors have come together to support a market so focused on individual client need,” Lara Mowery, global head of property specialty at Guy Carpenter in Minneapolis, said in a statement. “There is tremendous innovation driving tailored solutions at reduced pricing to the benefit of our clients.”
The full report will be available to clients in January.