When reinsurance power is absent, or in short supply, as we have seen in Florida and in the mid-year renewals, power is “King” and those who have it are arguably the most popular.
Aon’s Reinsurance Solutions highlighted the mid-year reinsurance trend in a recent report, noting that energy is King in Florida, where total reinsurance has now become a ‘value-added’ commodity.
One of the most important things for brokers and their cedents in the June and July insurance renewals was to get the power they needed, sometimes less is enough.
Wind risk in the southeastern US was particularly prominent in this revision, with traditional markets and other markets showing reduced risk in the region.
Some players “refused to cover parts at any cost,” Aon’s Reinsurance Solutions division explained.
“Uncertainty about the effects of climate change, real inflation, and inflation has increased the reluctance of reinsurance markets to provide more leverage,” the broker said.
Due to the increase in prices and the reduction of valuable insurance products available, many carriers have looked to hostages and other relationships to meet their needs, with the necessary power that is in high demand.
Over the years, we have seen some carriers buy more reinsurance than they need, as they look to protect their bottom lines against cat losses.
But this practice may be outdated, as long as the reinsurance market is still difficult and power is still King.
Specific to the Florida market, lawsuits, losses and the loss of exchange rates were a problem in the mind of the restorers in the renovation.
“Loss increases and claims continue – which are difficult to compare and quantify – continue to worry about reinsurers, which leads to a decrease in the market and interest in natural disasters in Florida,” Aon explained.
Reclaiming a contract that was affected by the previous year has become more common as reinsurers expand, as they look to make sure they close out the previous year before signing another risk.
In addition, reinsurers have been demanding more granular information, especially to help them understand issues such as inflation, lawsuits and climate change, Aon said.
Inflation has also increased the demand for insurance, which in areas where it has been a luxury item has led to higher renewals.
As a result of all this, the differentiation of the reinsurance broker’s clients has been important in this restructuring, in order to secure the volume that is needed from the traditional or alternative markets, Aon explained.
Aon says the best quality risk management is taking place in recycling, advising clients to define their risks and portfolios, and understand their costs and how they can be scaled up, as well as other possible options. to the cedent.
“The probability is increasing, but it is possible to find strong support,” the broker said.
We can also do that, that it is a good time for cedants to look at platforms and markets, which can increase risk and capital, which should also be considered as a strategy in a difficult market like this, where power is the King. .
It will be interesting to see how the reinsurance power is priced later this year.