Risk-adjusted rate increases for U.S. and Florida property catastrophe covers averaged 25% to 35% through June 1 and July 1 commercial reinsurance renewals, although the level of increase is slowing, according to a report Thursday from Aon PLC.
Aon said U.S. property renewals at the mid-year were “orderly, with ample capacity, albeit at elevated prices.”
Key to the smooth process was the insurer’s early start to negotiations and grasp of reinsurers’ expectations, allowing the cedents in some cases to make needed adjustments to reinsurance strategies.
Increased insurance-linked security activity also bolstered the renewal process by alleviating some demand-supply pressures at mid-year, Aon said. “Significant new issuance volumes” in the catastrophe bond market have put 2023 on track to a record year, with total issuance exceeding $8.6 billion year-to-date.
Retention levels generally increased at mid-year in the U.S. catastrophe property market after also rising at January 1 renewals and should now stabilize, Aon said.
Casualty reinsurance markets were “stable, with ample capacity across almost all major lines of business at the mid-year renewals,” Aon said. In excess of loss markets, “capacity was more constrained due to reinsurer concern for social inflation trends. Large international accounts with limits of $100 million or greater are being put under pressure by reinsurers,” as some large loss emergence was seen, Aon said.