Japan in line for relative relief in reinsurance rate through 2024

Japanese reinsurance buyers may take early relief from the hard market in 2024 as the lingering rate drivers have stacked up more for North American and European markets, one key equity brokerage is telling investment clients following a fact-finding mission throughout Asia.

“Our sense is the reinsurance market in Japan should be more favourable to buyers in 2024 as demand is stable and supply is increasing,” analysts at Wells Fargo said following a fact-finding mission to Asia.

The Japanese market did its larger repricing effort some 4-5 years prior following an outburst of typhoon losses. The loss story has remained relatively calm since that time, analysts note.

The size of the prior Japanese correction and the comparative weight of European and North American cat losses over the recent past has the pricing scales still tipped towards greater western hardening, Wells Fargo analysts concluded.

The upward pricing trajectory in North American markets also continues to feed on the impact of inflation on both claims costs and insured valuations and a new cat model which is working its way into the system.

In Japanese primary, insurers are said to be seeking “about double digit” rate increases in fire and “low single digit” gain in auto.

The Japanese majors continue to sport a huge mound of excess capital which management would still prefer to invest in western growth, Wells Fargo analysts say following talks.

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