Reinsurance rates rise again despite additional capacity

Global property catastrophe reinsurance rates increased between 10% and 50% during July 1 renewals, with even higher rates for insurers that incurred losses on their reinsurance programs, Guy Carpenter & Co. LLC said in a report Wednesday.

In the United States, property cat reinsurance cedents paid between 20% and 50% more for coverage, the reinsurance brokerage said.

The mid-year rate hikes follow steep increases in June, April and January reinsurance renewals. Reinsurers reduced capacity and increased pricing this year, citing losses from Hurricane Ian in 2022 and prior catastrophes.

“While lower-layer capacity and aggregates remained highly constrained, new capital raised by existing market participants and growing appetite by other established reinsurers saw overall capacity levels rebound,” the report said.

Catastrophe bonds saw strong demand from investors in the first half, the report said. By June 30, 41 cat bonds were placed, with $9.2 billion in total limits. The average limit for the past five years was $6.5 billion.

Recent reports from Gallagher Re and Aon PLC also showed significant reinsurance rate hikes.