June 15th, 2012

June 1 Renewal: Property Facultative

Posted at 1:00 AM ET

mowery_lara_1416flandro_david6David Flandro, Global Head of Business Intelligence and Lara Mowery, Head of Global Property Specialty
Contact

Catastrophic losses in 2011 had an acute effect on Lloyd’s and European reinsurers. Writers of property facultative cover whose books of business are heavily weighted towards the United States did not incur the same level of loss as those who suffered from last year’s significant international losses and associated contingent business interruption losses. There was nevertheless a concerted effort to increase rates in the first quarter of 2012 by all property facultative underwriters. This was particularly true of placements with significant catastrophe exposure.

After a limited, preliminary effect of changes to RMS v11 last year, facultative reinsurers have now implemented fully the results of their risk assessment process for 2012. This has led to greater upward pressure on pricing earlier in the year. Despite this, and after some initial modest increases, upward rating pressure was mitigated for April and May placements. With 2012 losses from tornado activity substantially lower than 2011 and the lack of any significant global catastrophe to date, rate increases should continue to be modest at best in the near term.

Capacity remains at or near 2011 levels. Several U.S. facultative managing general agents are seeing restrictive ‘underwriting boxes’ set by their Lloyd’s-backed security, but the impact to the whole of the market has been insignificant.

Click here to register to receive e-mail updates >>

AddThis Feed Button
Bookmark and Share


Related Posts