Catastrophe losses for 2017 are estimated around $136bn for the global reinsurance market, and is shaping up to be one of the worst loss years on record says the latest report from insurance broker, Willis Re.
Despite the scale of weather-related catastrophic events across the globe in 2017 rate increases did not rise to a level that reinsurers were expecting.
Disappointingly, pricing across global property catastrophe and risk programmes saw an average adjusted increases of just up to 7.5%.
James Kent, global CEO of Willis Re, said in a release: "Clearly the 2018 renewal season will for many reinsurers be a disappointment in terms of the rating levels achieved. However, this must be balanced against the ability of the market to provide buyers with stability of capacity at reasonable prices with an orderly renewal process, which demonstrates the growing advancement of the market.”
The catastrophe losses of 2017 according to Willis Re report are coinciding at a time when profitability in non-catastrophe lines is constrained and prior-year reserve releases are slowing.
Pricing corrections have been muted due to the combination of strong reinsurance market capitalisation, losses being split over a number of different events and the fact that a large tranche of the losses were retained in the primary market.
Market in resilience
For investors, the shape of the global reinsurance industry in 2017 was significantly different to those previous years impacted by large catastrophe events from the hurricanes Harvey, Irma and Maria to the wildfires in California.
This reinsurance industry has remained steady and recapitalised quickly as a result of strong regulation of traditional reinsurers and capitalisation supplemented by insurance-linked securities capacity, which has grown to $75bn.
Kent said: “No commentary on the January 1 renewal season can overlook the scale of human suffering and economic loss that the catastrophes in the second half year of 2017 have caused.”
"The global reinsurance industry is central to alleviating the impact of the 2017 hurricane losses. The speed of claims payments from reinsurers to their clients has been exemplary and the value of reinsurance has been illustrated to many clients yet again,” he added.