Rational pricing at the 1 April renewal date highlights the stability and maturity of the reinsurance market, according to a report from Willis Re, the reinsurance advisory business of Willis Towers Watson.
Willis Re 1st View, a thrice-yearly publication, which provides the first view on market conditions at the key reinsurance renewal seasons: 1 January, 1 April, 1 July, notes that reinsurers have adopted a rational rating approach at the 1 April renewal with price increases of up to 25 percent targeted towards loss-affected contracts and programmes.
The rate increases were balanced by flat renewals for loss-free classes and programmes.
According to the report, key to reinsurers’ rational pricing responses were continued high levels of market capitalisation, both from traditional reinsurers and insurance-linked securities markets.
Additionally, the report reveals that virtually all reinsurers have posted improved combined loss ratios for 2018, though for many it was a marginal improvement.
James Kent, global CEO of Willis Re, commented: “At a time when some participants in the global reinsurance market are promoting the need for substantial across-the-board improvements in pricing, reinsurers delivered considered, rational price adjustments–a sign of the market’s stability and maturity.”
He added: “As the global reinsurance market looks to address the current imbalance of supply and demand, the ability to demonstrate a stable, rational base plays a critical role in developing and promoting more solutions to new buyers and core clients.”
