Some reinsurers pulled back, others more positive on Japan casualty business at 1/4: Gallagher Re

The outcome of the Japan casualty reinsurance renewals at April 1st were predominantly stable or favourable, with some sellers pulling back from certain lines as others adopted a more positive approach, according to Gallagher Re.

In Gallagher Re’s latest report, the reinsurance broker emphasises that the focus during the April renewals regarding general third-party liabilities was on managing risks associated with the United States.

According to Gallagher Re, “Some reinsurers pulled back capacity, due to changes in risk appetite or concerns over US exposures.”

However, other reinsurers were more optimistic about adjusting their portfolios and cautiously expanded coverage.

Prices in this sector varied significantly depending on the types of risks involved, changes in how those risks were evaluated, and how much coverage companies wanted.

Regarding rate movements in Japan’s third-party liability sector, the report indicates that for excess of loss arrangements with no loss emergence, there were price increases ranging from 10% to 30% compared to the April 1, 2023 renewals.

Whereas, for business with loss emergence, rates increased by 20% to 30%.

In Japan’s personal accident sector, Gallagher Re reports that buyers of protection had divergent views on contagious disease, with some dropping coverage as means of reducing premiums spent, while others were able to fully complete placements.

Consequently, some reinsurance programs underwent significant changes, leading to shifts in available coverage for contagious diseases, with some becoming available at reasonable prices.

Despite these changes, there was substantial reinsurance capacity, with both existing and new companies willing to offer at least as much coverage as before, if not more.

In terms of rate movements, the reinsurance broker finds that for excess of loss arrangements with no loss emergence, pricing was down 10% to flat.

In the cyber sector, domestic portfolios in Japan continued to perform well at 1/4. Many buyers discussed reducing quota share cessions as a mid-term strategy.

Reinsurers still view Japan as a strong diversifier due to its steady growth, stable prices, and stricter coverage compared to other countries.

The implementation of war exclusions in domestic policies was a focal point, with Gallagher Re noting that “Most domestic insurers are committed to implementing new war exclusions under their original policies in the year ahead.”

However, the terms for reinsurance mostly remained unchanged, despite discussions regarding specific event coverage.

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