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Aggregate retro capacity has “reduced enormously” but rate increases were less severe than some had feared, the Willis Re international chairman said. -
Capacity was constrained but some ILS funds were able to grow, while cat bonds also propped up supply.
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New capacity and fewer problems with trapping contributed to a smoother renewal than some had expected.
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US cat renewals are outpacing European increases, but as signalled earlier this month, the level of rate hikes has fallen back.
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Costs outpaced the European benchmark rate change, but Covid loss negotiations have been deferred.
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Cedants and reinsurers perform a "slow dance" around pandemic losses, with claims negotiations deferred beyond renewal.
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A fresh BI ruling in Australia this week highlighted the industry's reason for caution over Covid exposure as legal actions continue.
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The carrier says higher retro renewal costs will act as a counterweight to rising rates.
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The reinsurers point to falling interest rates and loss experience as the basis for further hardening.
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Buyers are out early ahead of a challenging renewal, with retro rate hikes set to outpace reinsurance increases.
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Contingency losses will result in a total loss and an increased renewal cost.
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Retro structural change will provide a lot of the gains in 2021, with trapping negotiations complicating the mix.
