The results of our 2019 global reinsurance market survey reveal a more optimistic pricing outlook for the upcoming key January 1st, 2020 renewals season, with respondents expecting rate rises across the vast majority of business lines.
Conducted in August 2019, the survey includes responses from our senior reinsurance and insurance-linked securities (ILS) industry contacts and also the global readerships of both Reinsurance News and Artemis.
We received hundreds of responses from identifiable industry participants, including a number of reinsurance market CEOs and other senior decision makers. In fact, just under 72% of respondents to the survey either make or provide input to reinsurance buying decisions, compared with approximately 63% last year.
Looking at third-party capital and the expectations here going into the Jan renewals, and more than 82% said that they plan to use either the same or a little more ILS capital, compared with roughly 79% in 2018 ahead of the Jan 2019 renewals.
However, slightly more respondents did say that they expect to leverage either slightly less or significantly less ILS capital at 1/1 than they did last year, while the anticipation of using significantly more declined slightly.
Almost half of respondents feel that by 2020, third-party capital and ILS will account for 20% of reinsurance capital, while almost a quarter of respondents believe it will contribute as much as 25%, which is roughly in line with last year.
The amount of reinsurance protection that buyers expect to purchase at 1/1 2020 remains relatively unchanged year-on-year. However, the proportion of respondents that said they expect to purchase significantly more protection did almost double to 12%.
The survey reveals that price remains the top priority when looking for a reinsurance counterparty, again followed by credit quality / rating, while reputation fell down the pecking order and was replaced in third spot by the ability to offer large lines. This suggests that in today’s market environment, counterparty reputation is perhaps less important to buyers than it was a year ago.
A number of ILS funds were hit by loss creep from prior year events through 2019 and this was reflected in the survey results, with loss creep from typhoon Jebi cited as the biggest challenge to the market in the last year. Loss creep from hurricanes & AOB came in second, while climate change was viewed as the third biggest challenge of the industry over the last 12 months, followed by the Lloyd’s Decile 10 actions.
In light of the modernisation efforts at Lloyd’s of London as the specialist insurance and reinsurance marketplace looks to turn its fortunes, we were keen to get the industry’s thoughts on whether the market was doing enough.
Interestingly, approximately 62% of survey respondents said that the Future at Lloyd’s Blueprint initiatives will not be enough to turn around the market’s fortunes.
The full results of our second global reinsurance market survey provide a useful test of the temperature of the industry, offering insight on market sentiment and expectations as we move towards the January 2020 reinsurance renewal season.
We hope our readers and other interested parties find the results enlightening and useful in making their strategic decisions for the renewal season ahead.
The full results of our latest survey are freely available from today and we’re happy to discuss them with any industry participants. We’re interested to hear your thoughts.
We’ll also be analysing the full reinsurance market survey results over the coming weeks on both Reinsurance News and Artemis.
Analyse the results of our global reinsurance market survey here.