Guy Carpenter’s new briefing, Leading Up to January 2021 Reinsurance Renewals, highlights the myriad market developments providing the backdrop to January 1, 2021 renewals.
- As we look forward to January 1 renewals, there is some good news: primary rates are increasing, asset values are recovering and new capital is entering the market. The market, however, is complex.
- COVID-19 loss development continues to be slow and highly uncertain. This will be a factor at January 1 for individual renewals and may potentially affect reinsurers’ overall willingness to deploy capital. The average of all public COVID-19 loss estimates tracked by Guy Carpenter is roughly USD 66 billion. The reported losses attributable to COVID-19 through third-quarter earnings announcements to date, in contrast, are slightly over USD 25 billion.
- Based on these various factors, January 1 renewals and related negotiations are expected to be lengthier and more complex than in prior years.
- The risk landscape is shifting in significant ways, driven by a number of factors, including demographic changes, the rise of digital technologies, new platform business models, intangible values, cybersecurity and climate change. Insurers are facing new risks, and equally important, new opportunities. The reinsurance sector has a strong track record of responding to periods of change. Putting capital to work to create new coverages and meet evolving demands will be crucial in securing the sector’s long-term relevance.