Inflation Is A Key Issue for April 1 Renewals: Gallagher Re

During an “undramatic” and “balanced” April 1st, 2022, reinsurance renewals season, there was widespread discussion about inflation as reinsurers were keen to understand its impact on cedants’ portfolios, reports Gallagher Re. Here are highlights of the report:

Source: Gallagher Re | Published on April 4, 2022

Gallagher Re report

Orderly renewal - Capacity was largely sufficient in most classes but some constraints in certain specialty lines and retrocession classes. Larger reinsurers continued with their successful package underwriting approach.

Pricing movement - In line with 1.1.2022, modest single digit increases on property catastrophe covers supported by the significant increases in recent years on Japanese windstorm catastrophe rates following major losses and for most portfolios underlying stable or increasing original rates.

Inflation - Very much a key issue on all lines of business. Pressure on buyers to verify the actions they are taking in their original underwriting to manage inflationary pressures so reinsurers could reflect in their pricing models.

Ukraine/Russia - Tragic Ukraine situation starting to have some modest impact in terms of coverage but outside some specialty lines of business and some specialty retrocession covers impact not seen at 1.4.2022 other than a tightening of sanctions clauses with LMA3100 being universally adopted.

Catastrophe capacity - Some adjustment in reinsurers positions with a few looking to reduce or redeploy their capacity at higher attaching layers offset to a degree by other reinsurers looking to expand their catastrophe writings to build out their portfolios.