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Double-digit cat reinsurance rate hikes expected: Fitch


Catastrophe reinsurance rates will likely rise by more than 10% during year-end renewals, rating agency Fitch Ratings Inc. said Monday.

Insured losses of about $100 billion in 2021 and the prospect of natural catastrophe claims increasing in frequency and severity are the main drivers behind the expected increases for Jan. 1 renewals, Fitch said. Cyber liability and directors and officers liability reinsurers have also been hit by losses, the company said in a commentary on the sector.

“We expect 2022 to be the fifth successive year of price rises, although we expect growth to be slower than in 2021 as non-loss-affected lines of business are likely to show a broadly stable price development,” Fitch said.

The increases in rates are making the reinsurance sector more resilient to the effects of climate change, Fitch said.

In addition, the risk of rising inflation is manageable for the reinsurance sector, the rating agency said.

“Recent price increases in property lines of business are sufficient to compensate for upwards pressure on claims inflation as repair costs for housing or vehicles rise, while long-tail casualty lines will only start to suffer in the event of a prolonged effect of multi-year inflation above expectations,” Fitch said.