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The June 1 and July 1, 2024, reinsurance renewals revealed sufficient capacity to meet increased demand, with an additional $5 billion available for US insurers covering catastrophe-exposed properties compared to last year, according to insurance and reinsurance broker Aon.
Aon’s mid-year 2024 report highlights that this extra capacity brought the total market available to US insurers to over $10 billion year over year.
US national and Florida insurers benefited from strong catastrophe bond activity, which increased competition among traditional reinsurers. The healthy capital position of affiliated captives also allowed insurers to absorb more risk.
Aon noted that competition was fiercest at the top end of programs, but reinsurers also showed renewed support for lower layers, broadening their panels.
A key feature of the mid-year renewal was the widening of market support across programs, reflecting reinsurers’ interest in growth at attractive pricing levels.
Overall, buyers experienced lower risk-adjusted prices, better terms and coverage, and consistency across reinsurer panels. However, capacity remains price-sensitive and the market disciplined.
Retention levels, which increased significantly at last year’s renewals, remained mostly unchanged, though reinsurers were more open to adjusting attachment points. There was some flexibility for secondary perils coverage, but limited interest in traditional aggregate covers. There was noticeable interest in traditional sideways cover and aggregate protection in the structured solutions market, while the growing Excess and Surplus lines market offered more opportunities.
Aon emphasised, “Preparation and differentiation paid off at mid-year renewals. Successful buyers were those that clearly communicated their needs to reinsurers and were targeted in their requirements.
“Mid-year renewals also demonstrated the growing importance of year-round communication and engagement with the market and advisors. Buyers that understood their portfolios, and that were able to make informed decisions quickly based on data and analytics, were best positioned to respond to changes in reinsurer appetite and take advantage of what is now a much more dynamic and evolving reinsurance market,” Aon concluded.
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