2024 presented fewer surprises
Swiss Re’s chief underwriting officer for P&C Reinsurance, Gianfranco Lot, has shared his insights on the 2024 reinsurance renewal season, highlighting key outcomes and trends as the industry approaches upcoming renewals.
The 2023 1.1 reinsurance renewal was characterized as particularly challenging, but the 2024 renewal presented fewer surprises. This year’s renewal saw earlier placement of retro capacity, leading to a more orderly process with a greater emphasis on price discovery and increased competition.
In the firm’s insights, Lot explains that brokers played a significant role in facilitating the renewal process. However, the industry continues to face a high-risk environment, with geopolitical tensions, inflation, and elevated levels of natural catastrophes, making it crucial to maintain underwriting rigor.
In different lines of business, property reinsurance saw a general equilibrium in supply and demand, with some oversubscription in higher nat-cat programs. However, challenges persisted in placing lower attaching layers.
Lot stated that property per risk treaties remained difficult due to poor historical performance and a lack of structural changes. In US liability, moderated improvements in terms and conditions were observed, but these were not deemed sufficient to offset loss deterioration and the challenging outlook.
Specialty lines, particularly cyber, experienced a surprising trend with clients retaining more risk and ceding less to the reinsurance market, impacting proportional cessions.
Regarding contractual terms and conditions, no new topics emerged during the renewal, but existing challenges like wording ambiguity, strikes, riots, civil commotion (SRCC), and war exclusions remained key focuses.
Looking ahead to the 1.4 and 1.7 renewals in 2024, Lot said that it is too early to predict the impact. However, early events in January, including a powerful earthquake in northern Japan and incidents involving aircraft, along with ongoing global political uncertainty, will be factors in the renewal considerations.
Lot emphasized the importance of the industry maintaining underwriting discipline to ensure a sustainable balance in risk sharing. The hard work during 2023 has set the stage for more predictable renewals, and it is crucial that this momentum is sustained he believes.
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