The insured cost of natural catastrophe claims reached $62 billion in H1, according Munich Re, notes BI, suggesting 2024 will be another year when claims from extreme storms and earthquakes top $100 billion. The losses were significantly higher than the 10-year average of $37 billion. Total economic costs of $120 billion were lower vs. H1 2023 due to the devastation caused by 2023 earthquakes in Turkey and Syria. The costliest event in H1 was Japan's 7.5 magnitude New Year's Day earthquake that caused $10 billion of damage, with roughly $2 billion insured.
Charles Graham, BI Senior Industry Analyst – Insurance, said: “After record returns for reinsurers in 2023 - buoyed by a benign hurricane season -capacity returned during the midyear renewals, characterized by a sufficient supply of capital to meet rising demand. Risk-adjusted catastrophe placements were generally flat to down 10%, according to Gallagher Re. Reinsurers were more willing to adjust premiums rather than program structures. Flood losses in the UAE, southern Germany and Brazil in 2Q reinforced the companies' determination to maintain retention levels.
“That's in contrast to last year's renewals, when property-catastrophe rates in the US increased 10-20% on loss-free programs, and 20-40% on those programs that had been loss-affected. Rates rose by as much as 20% in Latin America and China, 25% in Australia and up to 40% in South Africa.”
After substantial price increases in 2022 and 2023, pricing in the June 1 Florida renewals saw average risk-adjusted property-catastrophe reinsurance rates fall 5% vs. the prior year, according to Howden Re, notes BI. Reductions typically ranged between 2.5-7.5%. Demand for an additional $3-$5 billion of capacity limits in Florida was all met.
Charles Graham added: “Increased demand for reinsurance capacity has been met by record levels of reinsurer capital. Aon estimates that global reinsurer capital was $25 billion higher in Q1 at a new high of $695 billion. That was driven by retained earnings, recovering asset values and new inflows into the catastrophe-bond market. The shareholders equity reported by global reinsurers is estimated to have increased by $23 billion to $585 billion in the first three months of the year, thanks to robust underwriting results and improved investment yields.”
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