Apr 1 renewals in the Indian market has seen majority of buyers suffered risk losses resulting in moderate price increases, according to the latest 1st View renewals report from Willis Re relaesed on Wednesday..
Majority of re/insurance renewals in Indian market happen on Apr 1. Indian general insurance market is expected to touch Rs 2 lakh core by end of FY 2019-20.
On the impact of situation triggered by caronavirus pandemic on the renewals in the Indian market, the report says reinsurers showed caution and added the exclusion wording, which was accepted by buyers as primary policies were not exposed, said the report..
Spread of COVID-19 and consequent social distancing measures prolonged the renewal, but placements were completed on time.However,there has been a continued rate improvement on the underlying business which has led to renewed interest in pro rata treaties, said the report.
Though GIC Re still dominates,quoting/leading by foreign reinsurers was observed,said the report.
State owned GIC Re was more focussed on bottomline than topline in the Apr 1 renewals..
“GIC Re continues to lead most of the domestic insurance companies and we have not lost any accounts other than thosewhere we deleberately stayed away,'' said GIC Re sources.
Frequency and severity of wind/flood events was lower than the average experienced over the past five years notwithstanding Cyclone Fani and monsoon flooding events, which affected most catastrophe programs, said the Will Re Apr 1 report..
On global front, the report says for those programs that were not completed well in advance, several reinsurers sought to impose COVID-19 exclusions which in some cases was achieved but in other cases buyers have been able to provide comfort that their original policies have no exposure to COVID-19 related losses with letters of understanding issued to reinsurers.
Early firm orders were completed without specific exclusionary language. In other cases, several reinsurers sought exclusions. In some cases, these were achieved; in others, buyers provided comfort through letters of understanding,which explained that underlying original polices have no exposure to COVID-19-related losses.
Reinsurers took a measured approach to the April renewals, which saw significant rate increases on loss affected accounts, more modest rises on loss-free business, added the report..
The largest risk-adjusted property price increases were seen on loss-hit catastrophe treaty contracts, which were up +30% to +50% for Japanese wind exposures, said the report..
James Kent, global CEO of Willis Re, said, “Having demonstrated its ability to manage the operational challenges of COVID-19 so far, the global reinsurance industry is well placed to demonstrate its ability to manage the longer-term financial challenge and continue with its mission of providing support to primary insurance companies and their policyholders.”