Reinsurers have adopted a rational rating approach at the 1 April 2019 renewal with price increases of up to 25% targeted towards loss-affected contracts and programmes. These rate increases were balanced by flat renewals for loss-free classes and programmes, according to the latest 1st View renewals report from Willis Re, the reinsurance division of Willis Towers Watson.


For treaty business, many reinsurers expressed hope that the April 1st 2019 renewals would see a stronger pricing increase momentum than at January 1st. In reality, buyers experienced rational rate increases from reinsurers, which were in some cases substantial, on loss-affected business. These rate increases were balanced by flat renewals on non-loss affected classes and programs,said James Kent, Global CEO of Willis Re.


There are no emerging signs of generalized hardening rate levels across the market and pricing remains rational.  Consequently, the observation from our January 1st View regarding primary rates moving faster than treaty rates still holds true, he added. 


Capacity has not been a constraint in the market, even for buyers who have sought to purchase additional limits; instead, the only restrictions in available capacity have been driven by price. The Japanese market is one of the largest buyers of catastrophe capacity outside of the US and, as in previous years, the bulk of capacity sought by buyers has been supplied by major traditional reinsurers, explained Kent. 

Continued high levels of market capitalisation both from traditional reinsurers and Insurance-linked securities (ILS) markets were the key to reinsurers’ rational pricing responses. Some buyers sought to purchase greater capacity both on an aggregate or occurrence level and the market was able to respond with capacity being constrained only when price was an issue. 


Meanwhile, for many buyers, long-term relationships remained more important than the modest rate reductions offered in some non-catastrophe, loss-free classes. ILS markets remained a small but unchanged force in Japan, with some increase in appetite from a few funds in a handful of areas.


James Kent, Global CEO of Willis Re, said: “As the global reinsurance market looks to address the current supply demand imbalance, being able to demonstrate a stable and rational base plays an increasingly important role when developing and promoting solutions to new buyers and core clients”.



After just one benign year, 2018-19 witnessed flood losses in Kerala, resulting in significant price increases on loss affected catastrophe programs.  ■ Some per risk programs suffered sizeable losses which drove price increases.  

■ GIC Re continued supporting proportional programs but took strong measures to improve the pricing and underwriting on the underlying portfolios. Foreign reinsurers also showed optimism in supporting proportional programs.

 ■ Notwithstanding increased support for proportional treaties there continues to be evidence of a gradual shift towards non-proportional structures as exposure measurement and analysis becomes more sophisticated.