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Reinsurance rates fell again at January 1, 2017, renewals, despite a 50% increase in catastrophe losses last year, as capacity remains plentiful in most markets, according to a report released Tuesday by Willis Re.
For U.S. renewals, there were some signs that rate decreases are slowing, following considerable improvements in renewal terms over the past several years, but competition from capital markets, among other things, kept a lid on increases for most loss-free accounts, according to the report by the reinsurance brokerage unit of Willis Towers Watson P.L.C.
In the United States, “Lack of major catastrophe loss activity and abundant capital continues to drive the soft market but price reductions are significantly less than January 2016,” the report said.
U.S. catastrophe reinsurance accounts that did not suffer losses saw flat-to-5% decreases at renewal, while accounts that reported losses saw increases ranging from 5% to 15%. In casualty lines, only auto liability-exposed accounts with losses saw average increases of more than 5%, according to the report.
“Reinsurers are seeking to differentiate their responses to programs based on their own view of pricing adequacy and long-term partnership goals,” the report said, regarding U.S. reinsurance renewals.
Capital market products, such as insurance-linked securities, continued to increase competition in the market, but there were fewer deals completed in 2016 than in other recent years.
Liberty Mutual Insurance Co. said Tuesday that it had created its first reinsurance sidecar, which will reinsure catastrophe and specialty risks.