Slowdown predicted in reinsurance price dropReprints
MONTE CARLO, Monaco — Reinsurance renewals at Jan. 1, 2016, should experience a similar easing of price declines as seen during this year’s June and July renewals, according to Willis Re executives speaking Sunday at this year’s Rendez-vous de Septembre reinsurance summit in Monaco.
“Downward pricing pressure is likely to exist on most placements but the slowdown experienced for mid-year renewals will likely be repeated at January 1,” said James Kent, co-president of Willis Re, and president of Willis Re North America.
He said some placements will be more competitive than others.
“The most competition is expected on regional property; casualty accounts with best-in-class loss ratios; specialty lines such as medical malpractice; surety; and accident and health.
“There is a downtrend in pricing, but we don’t expect to see the kind of mid-teen type of rate reductions we have seen in the past few years,” said Mr. Kent of the North American market.
“Macro industry trends are similar to what they were last year,” said John Cavanagh, Willis Re’s Global CEO.
“The challenging environment continues,” added Paddy Jago, global chairman, Willis Re and chairman, Willis Re North America.
He agreed, however, that mid-year renewals saw less severe price declines than previously.
“What we saw on June 1 and July 1 was a softening of the softening in decreases, so we do see sort of a flattening out,” said Mr. Jago.
He added that some buyers are increasing net retentions, lowering demand for reinsurance in general.
Mr. Cavanaugh was quick to point out growth opportunities, citing GDP-related growth in expanding markets such as the Middle East and Africa and the company’s specialty business, which “is doing exceptionally well at the moment.”