Reinsurance rates rise, some virus exclusions added
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Reinsurance rates increased for many accounts at April 1 renewals, with some reinsurers inserting communicable disease exclusions in contracts, according to a report by Willis Re released Wednesday.
Insurers with loss-hit accounts saw increases of 30% or more, and many other cedents also experienced rate hikes, the report said.
The April 1 renewal date is dominated by Japanese reinsurance renewals but cedents in other regions, including some in the United States, also have spring renewals.
According to the Willis Re report, reinsurance rates for wind and flood exposures for loss-hit Japanese catastrophe accounts increased between 30% and 50%, on average.
Japan was hit by several storms in 2019, including Typhoon Hagibis, which caused about $10 billion in insured losses, according to Munich Reinsurance Co., and Typhoon Faxai, which caused about $7 billion in insured losses.
Catastrophe rates for loss-free wind and flood catastrophe accounts in Japan increased between 10% and 35%, according to the Willis Re report.
Cedents renewing in the United States saw rate increases of 10% to 30% for loss-hit catastrophe accounts and flat to 10% increases for loss-free accounts.
For U.S. renewals, “Some reinsurers only authorized capacity with COVID-19 or Communicable Disease exclusions; however, this is by no means universally accepted and depends on the scope of the underlying business,” the report said.
Overall, renewals were completed on time, despite disruptions caused by measures to combat the spread of COVID-19, the report said.
“Many renewals were well underway before the impact of the COVID-19 virus, which helped support reinsurers reacting in a rational manner with their clients and brokers,” James Kent, global CEO of Willis Re said in the report.
More insurance and risk management news on the coronavirus crisis here.
