US cat wind accounts draw fresh capacity, but rates hold their own: CRC
New capacity may be arriving on the US cat wind market, but chiefly to displace prior year opportunistic players without putting excessive downward pressure on rates, analysts at wholesale and specialty insurance broker CRC Group said in their latest research.
“Markets continue to focus on underwriting discipline; however, increased appetite to gain market share has introduced renewed competition on many accounts,” analysts wrote.
CRC Group expects that loss-free cat wind accounts will see rate trends from plus 5% to flat “due to underwriters’ desire to expand market share” in 2024. Severely loss impacted accounts could see double digit increases, it said.
It’s the larger accounts that have drawn in the market's first stream of fresh capacity, but the impact isn’t going unmitigated into price, but is additionally “displacing the last-minute opportunistic capacity that signed-on to previous year renewals”. Terms are comparative stable for smaller middle market accounts.
The key southeast US market region is “starting to slow the rate of increases and reflects a desire by many underwriters to increase market share,” analysts wrote. They see new players and “renewed appetite from the Lloyds market” behind a rise in capacity that has slowed rate increases “while creating competition on programmes that was absent over the previous few years”.
MGAs are seeking to fuel up for the space. MGAs which saw their capacity either pulled or growth limited for 2023 “are now hunting for more capacity in 2024 to regain market share”.
Frequently that only means for smaller slices of more pies. Single-carrier MGA placements “will now require multiple participants and limits available may be short in some cases”.
The northeast region is having an easier time of it. Some excess layers may see flat premiums or reductions in some cases. “This region will continue to soften during 2024,” analysts wrote.
Hawaii, in contrast, is suffering capacity withdrawals. With the 2023 wildfire stoked by offshore storm winds, carriers are revising terms and cutting capacity, with insureds double-pinched as the market is less served by E&S channels than mainland markets, CRC said.
Price talk for the 2024 season, can't lean on major events like Hurricane Ian, but has managed to find alternative narratives to keep up the pressure. What 2023 lacked in catastrophic major US landfalls it made up for in named storm count, helping highlight storm surge and flood risks and the shortcomings of secondary peril modelling, a new focal point for price chatter.
“These events and their anticipated results will continue the trend of a disciplined underwriting environment with regards to the appetite for Cat wind in the US and Caribbean,” CRC analysts claimed.
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