Reinsurance Price Increases Support Improving Outlook for Sector: Fitch
Reinsurers’ plans to continue raising premium rates during the January 2022 renewals are likely to contribute to stronger profitability and an improving sector outlook, according to Fitch Ratings.
Fitch said it expects double-digit percentage premium rate rises for property catastrophe cover in 2022 due to the excess losses in 2021 and the prospect of higher natural catastrophe claims frequency and severity in the future. This would make 2022 the fifth successive year of price rises.
These price increases should help to bolster the sector’s underwriting profitability as they gradually feed into reinsurers’ underwriting margins, said the ratings agency in a market commentary.
Fitch noted that 2021 is expected to become one of the five most costly years this century for global reinsurers.
Severe floods in central Europe in July and Hurricane Ida in the U.S. in late August and early September together will bring insured losses during the third quarter of more than US$40 billion, while the price of global catastrophe claims in the first half was $40 billion, it continued.
The global total for 2021 will also reflect several smaller catastrophe events during the second half, including a series of wildfires, and will exceed the amount that reinsurers had budgeted for, added Fitch.
“Higher prices are making the sector more resilient to the effects of climate change on natural catastrophe claims patterns,” said the report.
“Reinsurers have shown discipline in prioritizing pricing for increased risk rather than seeking to undercut competitors to gain market share.”
Source: Fitch Ratings
Photograph: Homes, businesses and roads are flooded in the aftermath of Hurricane Ida in LaPlace, La., on Tuesday, Aug. 31, 2021. Photo credit: AP Photo/Gerald Herbert.
- Police Officer’s Family Sues Girlfriend Accused of His Death and Bars That Served Her
- Lowe’s Scraps Some DEI Policies as Activist Claims a New Win
- Mailing a Letter, in Context With Other Clues, Is Sufficient Cancellation – NC High Court
- Lyft is a Motor Carrier and State Farm Can be Sued Directly, Georgia Court Says