Capital supply was sufficient to meet demand for most placements at 1.1 casualty renewals: Howden

Differentiation was a key focal point leading up to the 1.1.2025 casualty reinsurance renewals, however, whilst there was a considerable focus on litigation risk and loss cost trends in the US, outcomes were reportedly determined by loss experience, underlying rate change and reserve development on individual portfolios, according to broker Howden.

In its renewals report, Howden noted that abundant supply and strong underlying fundamentals “set the scene” for international renewals, which was reflected in placements.

Moreover, the broker added that US casualty and professional lines renewals were a focal point for reinsurers this year, with key focuses being on loss cost trends and reserving risk for general liability, commercial auto and excess, which ultimately led to increased information requests on cedents’ claims experience and underwriting practices.

“Insurers perceived to have taken adequate action to tackle adverse litigation trends by, for example, implementing above-trend rate increases and adjusting terms accordingly, achieved better terms. Performance and long-standing relationships remained important differentiators,” says Howden.

However, despite there being a mixed appetite amongst reinsurers in terms of deploying capital at 1.1.2025, supply was sufficient to meet demand for most/several placements at this year’s renewals.

Staying on US casualty reinsurance, following muted changes at last year’s corresponding renewal, loss development for accident years 2016-19 were once again featured in negotiations at this year’s renewal, but with an increased focus on recent years’ development (2021-23) following some notable instances of reserve strengthening in 2024.

“For cedents able to satisfy reinsurers’ requirements around performance and underlying pricing, programmes renewed broadly flat. Beyond this cohort, ceding commissions on proportional business came under pressure, as reinsurers looked to be compensated for higher claims severity. Financial lines programmes saw slight decreases, with steeper reductions in areas where underlying pricing deteriorated more markedly,” the broker added.

On the other hand, workers compensation continues to develop, primarily due to a combination of strong performance, competitive pressures and external challenges. Howden explained that the line remains profitable due to the decline in loss frequency and 2024 is expected to be another strong year of underwriting gains, marking a decade of projected combined ratios below 100%.

As well as this, the broker also notes that workers’ compensation catastrophe capacity remains abundant, with price remaining relatively flat.

“Pricing for reinsurance on single- life exposed risks is under consideration, as the market becomes more cautious about long-tail liabilities and individual high-severity claims.”

Switching over to international casualty, Howden stated that it saw more stability and consistency at the renewals, as placements were eased by the reduced scale of the issues driving the US market.

However, for international programmes with US exposures, cedents with strong underwriting and claims management records saw modest changes to rates at January 1st, while pricing was said to be more volatile for programmes showing loss volatility from nuclear verdicts.

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