December 5, 2023

At midyear reinsurance renewals, U.S. property catastrophe risk-adjusted rate increases averaged the highest in 17 years, with even no-loss accounts generally up 20% to 50%.

As a result, the Guy Carpenter U.S. Real Estate Disaster Rate Online Index rose by 35% over the January-July 2023 renewal period, which you can now analyze using our interactive chart.

Guy Carpenter’s U.S. Property Catastrophe Reinsurance Online Rate Index is another way to measure price changes, incorporating the impact of structural adjustments and current perceptions of risk to what is actually paid.

You can view the index below. Click on the image to access the interactive version.

U.S. Real Estate Catastrophe Rate Online Index 2023

Commenting on reinsurance renewals mid-year 2023, Guy Carpenter explained that while overall reinsurance continued to “rebalance”, market conditions were less challenging.

The broker explained that the broader market trends seen at the January 1 renewals did continue mid-year, but with improved timing and consistency of terms and conditions.

Risk-adjusted rates for property pricing in many sectors have continued to rise, but the average change has slowed since 1 January.

Guy Carpenter went on to note that while this has helped, “capacity has increased and demand has increased,” but capacity remains constrained in terms of attachment points, pricing and coverage.

The broker further explained that there was strong demand for property reinsurance capacity at mid-year renewals, but added that “a market correction has rebalanced the gap between supply and demand that many regions faced a year ago.”

Pricing remains firm, but there has been broad risk-adjusted rate change at all levels.

Risk-adjusted rate increases for global property catastrophe reinsurance range from +10% to +50%, with losses-affected clients tending to see higher pricing, the broker said.

And in the US, property catastrophe reinsurance risk-adjusted rates generally rose +20% to +50%, even for no-loss accounts.

Guy Carpenter said capacity levels had picked up, helped by the insurance-linked securities (ILS) market.

The cedent typically chooses to retain more risk rather than accept unfavorable reinsurance terms, so lower tier capacity and volume remain highly constrained, but “new capital raised by existing market players and growing capital from other established reinsurers Interest led to a rebound in overall capacity levels.”

During the retrocession period, capacity was not as scarce as it was earlier in the year, but overall pricing trends continued mid-year, Guy Carpenter said.

But the main driver of the improving capacity environment appears to have more to do with lower demand from higher prices than any major recovery.

Dean Klisura, President and CEO of Guy Carpenter, commented: “Pricing adequacy and supportable structures across the lines are expected to continue to drive adequate capacity levels. For the spin-off company, the level of retained risk across the business in 2023 is relatively low. High, likely to impact volatility into 2024, hence the need for strategic portfolio management.”

“Amid the capacity rebound, a highly viable and vibrant market for insurance-related securities has emerged, with a flurry of activity in the first half of 2023. At Guy Carpenter, we are committed to helping our clients anticipate and navigate this A changing market added David Priebe, chairman of Guy Carpenter.

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