1.4 renewals: reinsurers showed resilience despite COVID-19 challenges
Reinsurers showed resilience to operating under challenging conditions and handled April renewals in a calm, pragmatic manner amid coronavirus (COVID-19) outbreak, according to Willis Re's 1st View report.
The April renewals saw significant rate increases on loss-affected accounts and more modest rises on loss-free business.
The largest risk-adjusted property price increases were seen on loss-hit catastrophe treaty contracts, which were up +30 to +50 percent for Japanese wind exposures. Loss-free treaties saw less dramatic rises and, in a handful of cases, renewed as expiring.
The capacity provided through insurance-linked securities (ILS) decreased slightly, with occasional examples of funds reducing their 1 April offer due to recent investor redemptions.
Casualty renewals were again under scrutiny in terms of loss development, and the aviation market saw price increases in excess of 20 percent for the first time in nearly two decades.
In terms of coverage, many April 1, 2020 programmes were fully placed well in advance of the due date and have been completed without any COVID-19 specific exclusionary language. For those that were not completed, several reinsurers sought to impose COVID-19 exclusions which in some cases was achieved but in other cases buyers have been able to provide comfort that their original policies have no exposure to COVID-19 related losses with letters of understanding issued to reinsurers.
The report highlighted that many reinsurers adopted a client-centric approach and managed to deepen their relationships with their key clients across all lines of business.
Willis Re noted that overall the global reinsurance sector moved smoothly to the new working from home model following the COVID-19 outbreak and was able to provide uninterrupted services. It said, reinsurers took a measured approach to renewals, while demonstrating their ability to manage longer-term financial challenges in the future.
James Kent, global CEO of Willis Re, said: “Having demonstrated its ability to manage the operational challenges of COVID-19 so far, the global reinsurance industry is well placed to demonstrate its ability to manage the longer-term financial challenge and continue with its mission of providing support to primary insurance companies and their policyholders.”
