That's the message from Jessica Zuiker, Amwins Group's assistant national property practice leader, and Rich DiClemente, Amwins Re's president. The pair cited last year's losses as a result of natural disasters.
"With losses totaling $145 billion, 2021 was the third most expensive year for weather and climate disasters," they said. According to NOAA, the United States experienced 20 separate events with economic losses of at least $1 billion each. Climate change will result in larger and more frequent loss events, which will increasingly factor into property reinsurers' pricing, preventing any price reductions in the near term. Many reinsurers are reviewing their CAT budgets, particularly for the Gulf Coast, Florida, and severe convective storm-affected areas."
"Facultative demand has increased year over year since 2019, and it's clear that this capacity is critical in completing the majority of layered placements," they added. However, re-insurers, like insurers, prefer to move out of more heavily loss-affected layers, and many will not look at layers affected by attritional losses. As a result, reinsurers have abandoned primary and low layer business in favor of higher attachment points on new or renewal business."
According to Zuiker and DiClemente, underwriting pens will be sharpened next year as combined loss ratios near 100 percent by the end of 2021 due to heavy losses in the facultative markets.
According to Amwins, these losses were both attritional and shocking.
"Property reinsurers routinely reject flat pricing on renewals, and reinsurers will be pushing rates even higher on loss-affected business," they added. Reinsurer retro costs have increased by 10% to 15%, which will be reflected in higher pricing, particularly on CAT-exposed business."