Howden Re sees 10% to 15% rate cuts in Japan catastrophe cover

Japan remains a key market for reinsurers due to its large volume.

Reinsurance broker Howden Re reported reduced pricing across key reinsurance lines during the 1 April renewals, particularly in Japan, where risk-adjusted catastrophe excess-of-loss rates dropped by 10% to 15%. 

The reductions mark a continued softening of the hard market that began in recent years.

In Japan, reinsurers sought to maintain or expand their market share amidst increased competition and supply, with pricing easing from elevated levels established after typhoon-driven losses in 2018 and 2019. 

Whilst major natural catastrophe activity in the Asia-Pacific region was relatively subdued in 2024, the Noto earthquake in January, Taiwan’s Hualien earthquake in April, and Typhoon Yagi in September were the most notable events.

Cedents in Japan purchased reduced limits at the lower end of programmes and sought additional top-layer protection. 

Proportional earthquake cover saw an average ceding commission increase of about two percentage points, reflecting improved terms. 

Japan remains a key market for reinsurers due to its large volume, relatively uncorrelated risk, and extensive underwriting data.

In specialty reinsurance, outcomes varied by class. Aviation reinsurance rates were flat, showing more stability compared to the 3.5% reduction recorded on 1 January. Russian leasing losses continued to impact treaty negotiations. 

The marine and energy sector welcomed new capacity, and despite some downstream losses in 2024, there was minimal effect on April placements. 

The March 2024 Baltimore bridge collapse, which occurred just after last year’s renewal, was closely watched.

Terrorism reinsurance pricing declined modestly, mirroring softening in the direct insurance market. 

Howden Re noted that reinsurance capital levels have recovered, surpassing the previous peak seen before the 2022 downturn. 

This rebound, supported by strong catastrophe bond issuance and inflows into insurance-linked securities, helped sustain capacity and drive price moderation.