Australian property reinsurance saw neat mid-year renewals: report

The property segment experienced pressures on pricing, particularly on loss-affected layers.

The Australian property reinsurance market recorded orderly mid-year renewals without material changes to wordings or conditions, according to the July version of Willis Towers Watson’s 1st View report.

Consistent with the renewals in January and April this year, the property segment experienced pressures on pricing, particularly on loss-affected layers. 

Some clients also raised retentions due to a lack of reinsurer appetite for low attachment levels or in response to poor loss experience. In addition, the appetite for aggregate and lower layers which are exposed to frequency losses was less abundant, the report said.

As for the casualty reinsurance segment, mid-year renewals saw a maintained upward rate trajectory as reinsurers continued to close the perceived gap between achieved premium and their view of technical premium, especially for businesses affected with losses or accounts with lower retentions.

Poor investment returns also affected rate increases, especially on particular long-tail treaties. Moreover, firm order rates were still below the reinsurers’ expected quotations, the report said.

Casualty reinsurers continued to be more selective on reduced shares or lapsed business they saw as unprofitable, but this did not translate into an absence of capacity.

The trend of reinsurers seeking a deeper understanding of underlying risk also continued. This was especially true for risks exposed to silent cyber and to a slightly lesser extent, the pandemic

Moreover, silent cyber continues to pose challenges for a casualty with little homogeneity in approach amongst buyers or reinsurers. Inflexible reinsurers have sometimes found themselves at a distinct disadvantage, the report said.