With reinsurance rates and pricing having increased at the key January 2021 reinsurance renewals, there is now an expectation that future renewals this year should follow-suit, with some saying rate rises may be even “more pronounced.”As we’ve already reported this week, , at the January 2021 renewals.Meanwhile, broker .While these increases back when renewal negotiations began, as we predicted in early December, the fact the market has seemingly moved its price expectations upwards in tandem is seen as boding well for the rest of the 2021 reinsurance renewal seasons.

Analysts from Morgan Stanley spoke with Willis Re executive Dirk Spenner, Managing Director and Head of EMEA North/East, to discuss the outcome of the January 2021 reinsurance renewals.The headline rate changes were below expectations, but the overall January 2021 reinsurance renewal developments were seen as positive.For property lines of reinsurance, Willis Re’s risk adjusted number for rate increases is around 2.9%, which equates to roughly 7% in monetary terms, aligning with the other reinsurance brokers.

That’s a drop from the 5%+ risk adjusted improvements that had been anticipated a few months prior.However, the analysts conclude after their discussion that, “It is encouraging to see that the market has finally turned and that the reported changes were ahead of those at the beginning of 2020.” Leading them to also conclude that, “More pronounced improvements are likely in the upcoming renewals in April, June and July.” While the January reinsurance renewal has a significant focus on EMEA, Latin America and some parts of Asia, many of the regions of the world and reinsurance programs that have been more loss affected renew later in the year.These future renewals, for Japan in April, Florida in June and the rest of the U.S.

and other parts of the world in July are all expected to see more pronounced rate movements it seems.Although the analysts caution that, “Having said this, we believe that global rate improvements are still on track to meet our mid-single digit expectation for the full year.” Finally, the analysts note that despite the expectation that reinsurance rates will continue to rise at renewals through 2021, this is not a hard market by definition.There is no particular imbalance between supply of capital and demand for reinsurance and if there was it would quickly be filled.

Instead, the analysts hope the rate rises seen at the January reinsurance renewals are indicative of “a more rational/disciplined approach” among market participants.“On this basis we believe that behavioural changes should be supportive of pricing conditions achieved so far for a longer period of time than in previous cycles,” Morgan Stanley’s analysts explained.However, they caution not to read too far ahead too soon, saying that, “It remains to be seen whether momentum will continue throughout 2022 and beyond.” .———————————————————————.

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