Global property catastrophe reinsurance rates-on-line increased by 27.5% at the January 1, 2023 renewals, more than doubling the increase seen a year earlier, as reinsurers acheived price increases on contracts.
The Guy Carpenter Global Property Catastrophe Rate-On-Line Index, which has been maintained by the reinsurance broker since 1990, is based on data sourced from real, brokered excess-of-loss reinsurance placements.
It is a proprietary index of global property catastrophe reinsurance rate-on-line movements that covers all major global catastrophe reinsurance markets. It is updated annually following January 1st renewals by calculating the year-on-year change in rates-on-line across the same renewal base.
According to the data, the Index has been rising since the January 2018 reinsurance renewals, when it rose 5.3% after falling 3.7% in 2017.
Global property cat rates-on-line increased by 1.1% in 2019, 4.6% in 2020, 4.5% in 2021, and 10.8% in January 2022, on average, at the respective January renewals.
This year, at the January 2023 renewals, the Index increased by 27.5%, more than doubling the increase seen a year earlier, ensuring that the global property cat reinsurance index increased for the sixth consecutive year, representing a cumulative total increase of 65%.
This the largest positive change in this index since 2006, when rates-on-line rose by an average of 36.6%, with the Index now nearly back at the level seen that year.
According to brokers and reinsurers, much steeper reinsurance rate increases were achieved globally at the January 2023 renewal, with that contract renewal season contributing significantly to this Index.
Dean Klisura, CEO of Guy Carpenter, suggested that reinsurers had the upper hand in the January cat renewals, as the reinsurance broker warned that the market is at a “crossroads” following a difficult period.