April 01 renewals “more of the same” – Willis Re
According to Willis Re, some property per-risk programs were affected by the worsening frequency and severity of non-catastrophe losses, leading to pricing increases and program restructuring. Aggregate covers, in particular, focused more on structure than on price, with reinsurers working to distance these accounts from attritional losses, the report said. Long-tail lines, and particularly casualty excess of loss, faced increased pricing pressure from reinsurers coping with low investment returns.
Pandemic and silent cyber exclusionary language followed a similar path as the January 01 renewals, through a combination of standard clauses and, from some reinsurers, customized language written to align with original policy wordings.
Meanwhile, demand was strong from insurance-linked securities (ILS) investors, especially for capacity made available through publicly traded bonds, which had a moderating effect on overall price increases.
“The market landscape has not seen much change since January 01 and consequently the important April 01 renewals saw more of the same between reinsurers and their customers,” said James Kent, Wills Re global CEO. “Market results for 2020 illustrate the challenges faced by the global reinsurance sector of reduced investment income, declining prior-year reserve releases, rising COVID-19 loss reserving, and increased volatility in the frequency and severity both of natural catastrophes and man-made losses.
“However, reinsurers’ 2020 results, when adjusted for COVID-19 claims reserves, have shown encouraging improvements in underlying combined ratios and buyers’ immediate concerns over capacity availability and pricing have been allayed leading to an orderly renewal.”