Post Milton, we see a flattening of property cat pricing at Jan 1 renewals: Klisura, Guy Carpenter

Dean Klisura, Chief Executive Officer (CEO) of Guy Carpenter, the reinsurance broking arm of Marsh McLennan, stated during the firm’s recent earnings call that although it’s still early, post hurricane Milton the broker sees a flattening of pricing in the property catastrophe market at the upcoming January 1 2025 reinsurance renewals.

Given the impacts of hurricanes Helene and Milton, which made landfall in Florida just weeks apart and affected many of the same areas with wind, storm surge, and inland flooding, Q3 earnings calls will undoubtedly have a focus on the storms and their potential impact on the property cat space ahead of the 2025 renewals.

Third-quarter and nine-month 2024 results kicked off today with global broking group Marsh McLennan, and during the company’s earnings call, Guy Carpenter’s Klisura, and John Doyle, President and CEO of Marsh McLennan, commented on the hurricane season.

“As we entered the fall conference season, ahead of Helene and Milton, I think our clients and we anticipated a very competitive market environment at the upcoming January 1 property cat renewal,” said Klisura. “I think post-Milton, you know, it’s still early, but I think we see a flattening of pricing in the property cat market at the upcoming January 1 renewal.”

The CEO went on to note that when considering the lower and mid-level layers and programs, “we kind of see risk-adjusted flattish at this point, without all the data in and you could still see some softening, some rate reductions in more, you know, remote risk layers in property cat towers.”

However, Klisura warned that it is still early days, since we are still in wind season, so there’s still potential for additional catastrophe events to shape the market ahead of 1.1 2025.

“It’ll be several weeks before we have sufficient claims data to make accurate loss estimates and those impacts on our clients. Right now, we’re just relying on all of our cat modelling partners to come up with some of those estimates,” she said.

Currently, insurance industry loss estimates for Milton range from $30 billion to $50 billion, so there’s still quite a gap between the low and high end of ranges. Nevertheless, as things stand, Milton is poised to be the most expensive insured loss event of the year.

“But to sum it up, I would say overall property cat demand should increase at January 1 from our clients. We think capacity in the marketplace will be adequate. We think the renewal will be manageable for most of our clients.

“The market is well capitalized to trade forward and meet client demand. And keep in mind, I think the headline, is the majority of the cat losses this year will be borne by our clients, given the high attachment points that were imposed on them after Hurricane Ian two years ago,” said Klisura.

Doyle also noted that within reinsurance, the brokerage continues to see a rise in demand as capacity remained adequate in the third quarter.

On the recent hurricanes, Doyle agreed that although it is too early to know the ultimate insured losses from hurricanes Helene and Milton, “we expect there to be an impact on 2025 property insurance and reinsurance pricing.”

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