In terms of large events, the global catastrophe experience in the first-quarter of 2019 was relatively benign. Adverse weather events did occur in some parts of the world through the opening three months of the year, but despite the combination of nat cats and some non-weather losses, such as the Ethiopian Air crash, KBW expects losses to be manageable for re/insurers.
After two years of heavy cat losses, reinsurance rates did improve for loss-affected accounts at the recent April renewals, in line with or slightly above the levels previously expected by KBW. As with recent renewals seasons, available capacity remained plentiful and, KBW expects this trend to persist during coming renewals.
However, analysts do state that the inflow of alternative reinsurance capital, which has been said to have a dampening impact on price hikes post-loss, is likely to be managed more conservatively than during the last two years.
“We expect the market’s sustained distinction between loss-free and loss-impacted accounts’ pricing to persist during mid-year reinsurance renewals, implying higher overall increases following the last two years’ significant catastrophe losses,” say analysts.
The upcoming June and July reinsurance renewals are heavily focused on U.S. accounts that experienced heavy losses over the last two years, and reinsurers are hopeful of more meaningful and sustainable rate improvements to offset some of the challenges underpinning the current, testing market dynamics.