Moderating trends in property market renewals: WTW

The property market has witnessed a shift to more relaxed circumstances as Q4 ’23 drew to a close and continued into Q1 ’24, marked by increasing competitiveness with each successive month.

At the start of 2024, insurers were hesitant to support rate flattening, but as Q1 ’24 progressed, more incumbent insurers lost renewal lines due to rigid rate stances, prompting a shift in mindset towards a more competitive market.

While new reinsurance capacity from traditional reinsurers has seen slight growth, there’s been a significant rise in available capacity from capital markets, such as insurance-linked security (ILS) cat bonds and sidecar arrangements, enabling insurers to offer more stable and sometimes increased capacity.

The 2023 Atlantic hurricane season saw fewer landfalls along the US East and Gulf Coasts due to powerful El Niño conditions, boosting insurer/reinsurer profitability and rate stability.

Current strong El Niño conditions are expected to transition to ENSO-neutral by April-June 2024, with increasing chances of La Niña development in June-August 2024, correlating with a higher likelihood of more intense US East and Gulf Coast landfalls.

The property market is experiencing a familiar cycle of rate adjustment, with downward pressure on rates being the initial result as conditions become more favourable. Underwriting discipline has been maintained, reflecting the stricter terms achieved during the prior year’s hard market.

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