In the lead up to January 1, 2025 renewals, we expect outcomes to continue to be dependent on technical, data-driven renewal negotiations. While reinsurance renewal conditions are currently being impacted by a range of factors, such as geopolitical volatility and continued economic and social inflation, the market remains strong with healthy reinsurer returns on equity, and adequate capacity.
The global specialty reinsurance market has entered a period of relative stability, following market upheaval characterized by significant rate movements, more restrictive terms and conditions, and upward shifts in attachment points. The Global Specialties 2024 Market Update: Key Report Findings provides a unique data-driven perspective on developments across the Non-Marine, Terrorism, Marine and Energy, Construction & Engineering, Aviation & Aerospace and Trade Credit, Bond and Political Risk sectors.
Partnering through crises, shocks and cycles
Against a backdrop of unparalleled volatility, dominated by disruptive forces such as climate change, systemic risk, AI, and geopolitical upheaval, the role for the re/insurance industry as a stabilising force providing resilience to businesses and governments alike has never been more important.
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The reinsurance market is characterized by reinsurers’ strong profitability in 2024 and growing capitalization, which is expected to continue into 2025. This is the view from a panel of Guy Carpenter business leaders who participated in a virtual media briefing Dynamic Trading Environment Meeting Reinsuarnce Demand hosted by Guy Carpenter which addressed the market outlook for the January 1, 2025 reinsurance renewals.
Mid-year renewals reflected a transitioning reinsurance market meeting demand in a dynamic trading environment. Loss-free property programs saw easing of pricing, even as demand increased. Casualty renewal outcomes varied by sublines as well as reinsurance type. General liability and excess/umbrella placements that are US exposed experienced continued reinsurance pricing pressure for excess of loss programs, while quota share outcomes were tied to the amount of adverse development.
The preliminary mid-year Guy Carpenter US Property Rate on Line Index is near flat year-on-year.
A responsive reinsurance market has materialized at January 1, 2024 renewals, reflecting ample capacity and a commercial approach to trading partnerships, albeit with continued underwriting rigor.
Reinsurance capacity increased through year end, driven by rebounding capital in the sector and healthy reinsurer returns, estimated to be near 20% for 2023. Guy Carpenter, in partnership with AM Best, estimates total dedicated reinsurance capital increased by 10% compared to year-end 2022. Differing from past years following a major market correction, capital growth was driven by existing reinsurers with no start-up class of 2023.
The broader market trends seen at January 1, 2023 continued at mid-year renewals, but with improved timing and concurrence around terms and conditions. While property pricing saw continued risk-adjusted rate increases in many segments, the average change moderated from January 1.
Global property catastrophe reinsurance risk-adjusted rate increases ranged from +10% to +50%, with loss-impacted clients often seeing higher pricing. In the US, property catastrophe reinsurance risk-adjusted rate increases were on average the highest in 17 years, with loss-free accounts generally up +20% to +50%.
The preliminary year-to-date Guy Carpenter US Property Catastrophe Rate on Line Index, an alternative measure of price change that incorporates the impact of structural adjustments and current views of risk on actual dollars paid, increased 35% for January through July renewals.
