The findings indicate a move towards changes in the re/insurance market, and mark the end of a tumultuous period referred to as “The Great Realignment.”
2023 has seen improved market conditions characterised by a balanced interplay between supply and demand.
The report also highlights the nuanced conditions within the re/insurance sector, influenced by emerging macroeconomic and geopolitical factors, as well as adjusted loss expectations. Despite the complexities, the market’s enhanced supply dynamics suggest a change in sentiment, evident in the momentum of pricing across various segments and an increased willingness to deploy capacity.
The renewal process benefited from favorable supply conditions and a concentrated effort on underwriting discipline, resulting in stable and well-organized renewals. The market exhibited sufficient supply to meet the growing demand, and risk-adjusted pricing, for the most part, remained unchanged. However, regional and business-specific variations reflected distinct loss experiences.
According to Howden, in 2024, the focus shifted to terms and coverage scope, leading to an overall improvement in concurrency. Capital inflows played a pivotal role in creating more favourable market conditions.
Key highlights from the January 1 renewal period include stable retrocession renewals, supported by the absence of significant losses in 2023, positive developments post-Hurricane Ian, and increased capital inflows. The direct and facultative (D&F) reinsurance market saw robust support for clients renewing programs, with a notable demand for D&F catastrophe cover driven by higher rates on original business.
Global property-catastrophe reinsurance rates experienced a moderate average increase of 3% at the start of 2024, significantly lower than the 37% increase recorded in 2023. The casualty sector at the beginning of 2024 exhibited sufficient capacity and disciplined market approaches, with discussions around economic and social inflation influencing underwriting decisions based on individual account performance and prior-year developments, as per the report.
Tim Ronda, CEO, Howden Tiger, said: “The reinsurance market has stabilised after last year’s exceptionally challenging renewal. Reinsurers were relatively unscathed by large losses in 2023, due in part to more favourable terms and conditions, including higher risk retentions and attachment points. Returns are back at equal to, or greater than, reinsurers’ cost of capital. Activity in the lead-up to 1 January was timely and orderly, and our clients are in a better position to understand their cost of reinsurance and volatility within their retention. It seems we are in a period where stability is rewarding both clients and reinsurers.”
David Howden, Founder & CEO, Howden, also commented, saying: “Risks are escalating as the world lurches from one crisis to another. The value of risk transfer comes to the fore during such volatile times. This is the moment for brokers and carriers to step up and apply our intellectual and financial capital to find creative solutions that safeguard the insurability of assets exposed to a myriad of risks, including climate change, geopolitical instability and rapid technological advancements.”
He added: “Offering innovative products that meet clients’ changing needs is the route to long-term relevance, and new possibilities.”
