Gallagher sees challenges in reinsurance renewals, more likely into 2023

Reinsurance rates have been driving upwards through the first half of the year, with worst-case Florida cedents suffering as much as 50% increases and with continuing capacity constraints promising more to come, officials at  Arthur J Gallagher have claimed.

“There are challenging supply-demand dynamics in some parts of the property market and many reinsurers are pulling back capacity,”  Gallagher’s CEO of Brokerage Services, Thomas Gallagher (pictured), told an investor call.  He cites “limited new capital entering the market” which is “already creating challenges for a number of July property renewals.”

“We see that likely to continue into 2023 renewals as well,” he said.

The recent Florida renewals proved deadly for select loss-ridden primary insurers.  Gallagher cited price increases “ranging from 10% for loss-free accounts up to more than 50% increases for those loss impacted cedents.”

Outside the US, price movement for property reinsurance is somewhat tamer, but also shows divergence between best and worst performers. “Where loss activity has occurred, reinsurers are driving price increases, while clean renewals are closer to flat.”

Specialty lines are noting “varying levels of very high rate increase” with gains in marine and aviation driven by losses from the Russian invasion of Ukraine while “cyber is a factor of demand outweighing supply.”

In casualty, pricing “is on more stable footing today,”  Gallagher said of trends in both the US and international, “however the growing threat of inflation and the potential for post-covid frequency and severity increases are likely to lead reinsurers to push for rate.”

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