Despite a rough start to the quarter, capacity was generally available for June and July renewals, albeit with a range of outcomes for insurers driven by timing, structure, and peak zone capacity constraints. Demand remained relatively stable as many governmental-related covers were pulled from the market offset by some insurers electing to secure additional capital to reduce volatility heading into a predicted, above-average hurricane season. Despite different market dynamics than in many past renewals, insurers were able to secure needed limit in the face of already reported COVID-19 related claims, future uncertainty regarding macroeconomic trends and premium volume impact from COVID-19 for the longer term.
Q1 total global reinsurance capital stood at USD590 billion, a decrease over 2019 of USD35 billion, or 6 percent. This result was comprised of a 6 percent drop in traditional reinsurance and a 4 percent drop in alternative capital ending the quarter at USD499 billion and USD91 billion, respectively. While traditional reinsurers saw impacts of COVID-19 that affected capital results at the end of Q1, alternative capital remains impact by approximately USD15 billion in trapped capital.
Prior to the onset of COVID-19 in the US, primary rates were trending towards the highest increases in many lines of business seen in years. By the end of Q1, auto, property, and umbrella lines of business were looking at rate increase above 10 percent for the quarter.
Premium levels for the remainder of the year remain uncertain as multiple factors impact outcomes from prolonged lower usage of cars to reduced patronage in retail stores and unfilled airline seats. These dynamics will in turn fuel different needs from insurers for reinsurance protection throughout the remainder of the year.
Property catastrophe losses through the first half of 2020 maintained near median levels of activity with approximately USD26 billion in losses accumulated to date. That said, above normal forecasts for the Atlantic Hurricane are predicted by National Oceanic and Atmospheric Administration, Colorado State University, and Tropical Storm Risk, which would be further
Reinsurance Market Outlook
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