Fifth year of premium rises for property catastrophe on cards.
Property catastrophe reinsurance is likely to see double-digit premium rate rises in 2022, according to Fitch Ratings.
In analysis following September’s Monte Carlo Rendez-Vous and Baden-Baden in October, the rating agency said rising natural catastrophe claims linked to climate change were driving prices up.
“Natural catastrophe claims have become more frequent and severe in recent years due to climate change,” it states. “We expect 2021 to become one of the five most costly years this century for global reinsurers. Severe floods in central Europe in July and Hurricane Ida in the US in late August and early September will, together, have caused insured losses of more than $40 billion. Globally, there were about $40 billion insured losses in 1H21.
“Prospects of a strong economic recovery and lower pandemic-related losses were also key,” it added.
If rate rises do occur, it would be the fifth successive year of price rises, it states.
“The price increases should help to bolster the sector’s underwriting profitability as they gradually feed into reinsurers’ underwriting margins,” the analysts wrote.
“Higher prices are making the sector more resilient to the effects of climate change on natural catastrophe claims patterns. Reinsurers have shown discipline in prioritising pricing for increased risk rather than seeking to undercut competitors to gain market share. The growth of catastrophe bonds to pass risk directly to investors could also become an important factor to mitigate the sector’s exposure to climate change risk in the coming years.”