Reinsurance broker Willis Re in a recent report state that the 1st January renewals have been challenging for underwriters with rate reductions of up to 25% for US property catastrophe reinsurance. It also suggested that international property rates were down by up to 15%. All these reductions are on top of significant loosening of terms offered by underwriters, including improved reinstatement provisions and expanded coverage. Guy Carpenter’s property catastrophe rate online index also reported a less severe decline in premium rating of 15% for the US and the UK markets, with Europe seeing reductions of 10%. It should be noted that some loss affected territories, such as Germany and Canada, which have both been affected by severe flooding, have seen rate increases of up to 30%.
Whilst the property catastrophe business seems to have been the hardest hit, most other lines of business have also seen rate reductions. Aviation business has seen reductions of 20% over the last twelve months. For the marine and energy markets, reductions of 10% have been the norm, this is with the exception of marine liability where there have been increases of up to 10%. Casualty business has seen some minor falls, but has broadly been flat, in spite of low investment returns. US casualty business has continued to show a gradual increase in rate. Direct UK private car motor insurance has seen rates down 12%for the year, but there are signs that they are bottoming out. Motor fleet has maintained uplift in rates and motor reinsurance has also seen further increases of between 10-20%.
Aon Benfield predicted that buyers will continue to benefit through the April, June and July renewal seasons.