Reinsurance buyers saw sharp rate hikes during June 1 renewals, which largely focus on the Florida windstorm market, and reinsurers sought to push up attachment points to reduce claims frequency on lower layers.

After a tumultuous renewal at Jan. 1, where double-digit rate increases were common, cedents, brokers and reinsurers began talks early for the mid-year renewal season.

“For the most part, the renewal was orderly, and everybody was able to get the capacity and coverage they needed, albeit at higher rates,” said Chris Dittman, head of Florida strategy at Aon PLC’s reinsurance solutions unit, adding that the higher costs were largely within the expectations of all the parties involved.

The absence of sticker shock was largely due to better planning, Mr. Dittman said. “The reinsurance brokers did a much better job of preparing the carriers at June 1 for this renewal. There was more preparation done. We started earlier.”

Some reinsurers approached key clients early, said Adam Schwebach, Tampa, Florida-based executive vice president and branch manager for Gallagher Re, the reinsurance brokerage unit of Arthur J. Gallagher & Co.

“Contrasted with the extremely late and highly dislocated Jan. 1, June 1 was more orderly and less dislocated. Programs were largely being filled out earlier, but this was very much dependent on price hitting the right hurdle,” said Christian Dunleavy, Bermuda-based group chief underwriting officer at Aspen Insurance Holdings Ltd. Higher-quality insurers were able to secure capacity first, he said.

Recent commentary by brokers about risk-adjusted rate increases in the 30% to 40% range at June 1 were likely correct, Mr. Dunleavy said.

A report issued last week by London-based Howden Broking Group Ltd. showed risk-adjusted property catastrophe reinsurance pricing up 33% on average within a typical range of 25% to 40%. The lowest layers of reinsurance towers proved most challenging.

“Low-attaching property catastrophe remains the most challenging segment of the market to fill, especially on portfolios covering multiple geographies and perils,” said Justin Lorence, a Minneapolis-based senior broker at Lockton Re, a unit of Lockton Cos. LLC.

“Not surprisingly, low layers remain the most difficult to place,” Mr. Dunleavy said.

Mr. Schwebach said some of the perils that are hitting lower reinsurance layers more frequently, such as hail damage from severe convective storms, are being moved into captives as the risks become increasingly hard to place. 

Randy Fuller, New York-based managing director at Guy Carpenter & Co. LLC, said many of the more difficult coverage negotiations were worked through during Jan. 1 renewals, which meant there were fewer surprises during mid-year renewals.

Property valuations were also an issue because building and repair costs have increased due to inflation.

“Over the last decade, exposed values have grown, but property reinsurance attachment points often had not, leading to reinsurance structures being hit more frequently,” said Matt Junge, Schaumburg, Illinois-based head of property underwriting U.S. for Swiss Re Ltd.

Increased losses have come from perils such as wildfire, tornado, hail and winter storms, he said.

“Reinsurers are looking to reset attachment points to something more sustainable long term. Insurers looking for reinsurance to protect loss frequency are still having a tough time finding enough capacity and those that are finding the capacity are paying much higher prices for it,” Mr. Junge said.

While adequate values have always been important to property insurers and reinsurers, “the focus on them now is heightened due to inflation and increased loss trend,” Mr. Junge said.

Lower layers of reinsurance coverage, which are subject to the most loss frequency, have been the hardest to renew, along with programs that have had generally challenging experience over the past few years, he said.

Coverage layers at higher attachment points that have avoided attritional loss activity from secondary perils are more favored by the reinsurance market, Mr. Junge said.

Cedents were diligent in how they presented valuation assumptions in their data and how they expect those values to trend over the course of the hurricane season, said Mr. Lorence of Lockton Re. Reinsurers appeared receptive and appreciative of the added transparency, he said.