Non-marine market still sees more demand than supply for quota share capacity, Guy Carpenter

Guy Carpenter, a global risk and reinsurance specialist, highlights that in the second quarter of 2024, there was a significant increase in demand for peak peril retrocession (retro) coverage and cat on direct and facultative (D&F) limit across the non-marine market.

It’s important to note, that demand for retro XoL coverage increased following the April 1  reinsurance renewals, driven by appetite from buyers at January 1 renewals for peak peril retro top up limit and new buyers looking to re-enter the market.

At the same time, Guy Carpenter notes that lower-level cover remains a “fairly narrow market”, however brokers are said to keen to get more reinsurers venturing back into that space.

In quota share, results have been strong, therefore meaning that more markets are willing to deploy capacity on a quota share basis.

However, Guy Carpenter stated, that across the retro space in the non-marine market, there is still more demand than supply for quota share capacity.

The biggest issue that lies ahead for the upcoming January 2025 renewals is what ends up happening during the remainder of the North Atlantic hurricane season, Guy Carpenter added.

According to the firm, there is currently sufficient capital in the market to meet demand, but more is likely to be deployed, which will impact overall cost and supply dynamics.

John Fletcher, CEO, Bermuda, commented: “Clients buying a material amount of capacity should be assessing as many pools of capital as they can – traditional reinsurers, ILS reinsurers for occurrence and aggregate, as well as quota share and cat bonds or looking at index products.”

Roland Morse, Managing Director, Non-Marine Specialty, said: “A more stable risk on D&F market is enabling greater client differentiation, based on historical loss performance and portfolio composition.”

Richard Morgan, Head of Non-Marine Specialties, added: “As with previous renewals, Guy Carpenter advocates accessing multiple pools of risk capital. As we approach the renewals, we anticipate that clients will have a greater choice of who they want to trade with.”

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