Reinsurance at the crossroads
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Subjected to extreme events in recent years of unprecedented unpredictability, reinsurance has been absorbing shock after shock: epidemics, climate change, geopolitical risks, attacks, riots, wars, cybercrime. In successive waves, growing risks of a systemic nature are relentlessly shaking down a market on the verge of suffocation.
It is therefore in extreme adversity that the profession has approached the 2023 renewals, determined to adjust as quickly as possible to a situation that may well end up in a shambles.
As a result, after three months of tough negotiations, the reinsurers have ultimately managed to impose unprecedented rate increases on their cedants, with the rate of certain coverages having even been multiplied by three especially for the classes of business and zones most notably exposed.
Reinsurers' pressure has particularly paid off in the natural catastrophe class of business, a major concern for reinsurers, with premiums increasing by an average of nearly 40%. In aviation, due to the blocking of 500 aircraft by the Russian authorities, fleet renewal rates are up by 150% to 200%.
Finally, many reinsurers, including SCOR, are reducing their risk exposure, especially in the United States, where natural catastrophes are up by an average of 50%.
In fact, leaders’ resolve has been further enhanced by the reduction in capacity offered by financial reinsurance. The rebalancing of reinsurance supply and demand in favor of the traditional market has given Munich Re, Swiss Re and others the competitive edge to impose their demands.