Pricing corrections in the property catastrophe reinsurance market over the last few years have been localized, and mitigated to some extent by sufficient levels of capacity. These traits, along with the fact that the mix of loss-affected and non-loss-affected business up for renewal at January 1 is more diverse than at mid-year, created a wide range of outcomes, including within regions.
Pricing adjustments for loss-impacted programs in peak zones were significant in some cases, whereas non-loss-impacted accounts in other geographies trended flat to marginally down. Given the weighting of peak zone limit up for renewal at January 1, Guy Carpenter’s Global Property Catastrophe ROL Index rose by approximately 5 percent, based on preliminary calculations (see chart below). This leaves the index near pricing levels recorded in 2015.
Property catastrophe renewals displayed an extremely wide degree of variation depending on program specifics such as losses, geographies and exposures.
• Increased pricing on loss-impacted programs in US zones where risk assessment is shifting was material to the movement in the Global ROL index.
• Although Japan suffered significant damage from typhoon events for a second consecutive year, relatively benign loss activity elsewhere in Asia resulted in negligible risk-adjusted pricing pressure for the territories that renewed at January 1.
• Property catastrophe renewals in Europe, which experienced another relatively quiet year in 2019, were generally flat to down moderately on loss-free programs due to more than sufficient levels of capacity and strong competition.