Reinsurance Rates Set to Shift in 2023
As the new year approaches, the global property catastrophe reinsurance market is poised for a significant change. According to leading reinsurance broker Guy Carpenter, rates are expected to drop by 5% to 15% for businesses that have avoided losses. This marks a notable shift in the market, which has seen years of rate increases.
A More Competitive Landscape
The reinsurance industry plays a critical role in insuring insurers, but in recent years, they have been forced to raise prices and exclude certain businesses due to increased losses from wars and natural catastrophes. However, with strong profits in recent years, reinsurers are now more willing to take on risk, leading to a more competitive market.
Profits Drive Rate Decrease
The improved financial performance of reinsurers has been driven by a positive property experience over the last two years. As a result, renewal outcomes at year-end are reflecting this trend. “Reinsurers are now more confident in their ability to manage risk, leading to a decrease in rates for businesses that have not suffered losses,” said Dean Klisura, president and CEO of Guy Carpenter.
Exceptions to the Rule
While the overall trend is towards lower rates, there are exceptions. Insurance portfolios that have faced catastrophe losses in the United States, Europe, and Canada will not see the same rate decreases. In fact, these businesses may even face rate increases of up to 30%. This highlights the ongoing challenges faced by insurers in these regions.
A New Era for Reinsurance
As the market continues to evolve, it’s clear that reinsurers are adapting to changing circumstances. With a more competitive landscape and improved financial performance, the industry is poised for a new era of growth and innovation.
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