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LONDON (Reuters) – Global real property reinsurance rates ranged from unchanged to falling by “mid to high single digits” percentages in July, reinsurance broker Guy Carpenter said on Monday, after years of rising rates.
Insurance companies tend to renew their reinsurance contracts on specific renewal dates, including July 1.
Reinsurance costs — insurance for insurers — in Florida, California and other areas vulnerable to natural disasters like hurricanes and wildfires have risen sharply in recent years due to catastrophic losses, in part because of climate change.
High rates have boosted reinsurers’ profitability, giving them room to cut rates this year, said Lara Mowery, head of global distribution at Guy Carpenter.
“Pricing adapts to the new environment.”
Insurers often pass on changes in reinsurance rates to their corporate and individual clients.
The rate cuts come despite global catastrophe insurance losses of about $50 billion in the first half, 8% higher than the revised five-year average. Jay Carpenter said severe storms in the United States were the main driver of losses.
Catastrophe bonds, a way for institutional investors to gain exposure to catastrophe risks, hit a record $11.9 billion in issuance in the first half, Guy Carpenter said. Catastrophe bonds generally pay a good return but do not pay out if a specific disaster occurs.
Reinsurance broker Aon (NYSE:) also said property catastrophe reinsurance rates declined for its national U.S. and Florida specialty insurers during the mid-year renewal season.
