According to the latest report of Howden Re, during the renewal period of property catastrophe reinsurance on June 1st, the rate continued to slow down, and the risk-adjusted price changes ranged from flat to a 20% decrease, depending on the loss record and additional conditions. Although the underwriting standards of reinsurance companies remain strict, the expansion of market supply, especially in the excess loss (XoL) layer, has driven competition with the return of new capital and reinsurance companies, resulting in a 10%-20% reduction in rates for some layers. The Florida market has stabilized due to legal reforms. Traditional reinsurance companies have gained more confidence in pricing, and the growth in demand has absorbed the new production capacity.
The report indicates that capital inflows into the property catastrophe XoL market have increased, and newly established reinsurance companies and syndicates have actively participated in the mid-year placement. The top-level pricing is the most competitive, partly due to the overcapacity in the insurance-linked securities (ILS) market, with a significant reduction in rates. Ceded individuals tend to purchase multi-tier or complete plan structures, and reinsurance companies are also more willing to support comprehensive underwriting rather than individual transactions. Furthermore, the market demand for catastrophe event frequency insurance has risen, and reinsurance companies have begun to offer more flexible products, such as overall insurance or coverage for second and third events.
The reinsurance market in Florida has been favored for the stability of litigation reforms and distribution of benefits (AoB) restrictions, and traditional reinsurance companies have re-entered the market after years of caution. Despite a 20% increase in the FHCF (Florida Hurricane Disaster Fund) retention, demand in the private market at lower levels remains strong. Howden Re pointed out that capital deployment has become more diversified and disciplined, and the ILS market at the top of the tower provides flexibility, marking the market’s shift from a crisis to a stable adjustment stage.
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