Competitive reinsurance marketplace observed at mid-year renewals, landscape remains dynamic, Aon

Global re/insurance broker Aon has reported that insurers generally achieved positive mid-year renewal outcomes, which included rate reductions for property catastrophe risk and improvements in terms and coverage.

However, the broker notes, that while a “more competitive reinsurance marketplace was observed”, the landscape remains “somewhat dynamic” due to volatility in secondary peril losses in property, heightened Atlantic hurricane season forecasts, social inflation and adverse reserve development in casualty.

Compared to 2023, mid-year capacity for U.S. catastrophe-exposed business was more than sufficient to meet increased demand, with around $5 billion of additional catastrophe limit purchased by U.S. insurers.

According to Aon, renewals on June 1 and July 1 continued to build on the positive momentum of the January 1 and April 1 renewals, with increased appetite from traditional reinsurance and ILS markets ultimately resulting in downwards pressure on pricing for both U.S. nationals and Florida specialist insurers, with the latter witnessing rate reductions for the first time in three years.

In addition, Aon notes that renewals in both Latin America and the Caribbean were also positive for insurers, with ample capacity to meet demand and risk-adjusted flat, to single-digit rate increases.

Shifting attention towards Australia and New Zealand, insurers also reportedly experienced stable market conditions, as around 80% of their property catastrophe reinsurance business renewed at mid-year.

Steve Hofmann, co-president of U.S. Reinsurance Solutions at Aon, commented: “We are pleased to see the ongoing stability of the reinsurance market, which now presents profitable growth opportunities for both insurers and reinsurers. Over the past 18 months, we have advocated for this balance on behalf of our clients by introducing additional risk transfer capacity, and launching new technologies to enhance risk assessment and management.”

Kevin Traetow, co-president of U.S. Reinsurance Solutions at Aon, added: “Indeed, the ability to make quicker, data-driven decisions provides our clients with the clarity and confidence needed to navigate the market effectively.”

Furthermore, Aon also notes that total reinsurance capital reached a new record high of $695 billion by the end of the first quarter of 2024, increasing from $670 billion at year-end 2023.

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