Big insurance losses from hurricanes, wildfires and other natural disasters over the past two years are set to push reinsurance renewal rates higher in January, ratings agencies said.
After falling for several years due to competition and fewer natural disasters, renewal rates have started to climb in the past couple of years and for 2020 are set to rise on average by as much as 5%.
However, as Hurricane Dorian ravages the Bahamas and bears down on the United States, Fitch, Moody’s and S&P Global said some rates could jump by much more than that.
S&P said rates would likely rise by around 5%, Moody’s expected rises of 0-5%, while Fitch predicted 1-2%, in briefings ahead of the reinsurance industry’s annual conference in Monte Carlo which begins on Saturday.
Reinsurers such as Swiss Re, Munich Re and the Lloyd’s of London market help insurers share the risks of disasters in return for part of the premium.
“It’s not a hard market but it’s a hardening market, there’s more positive momentum,” Ali Karakuyu, lead analyst at S&P Global, told a media briefing.
Fellow analyst David Masters said the industry was likely to see “mid-single digit price increases” as a result.
Insurers are increasingly concerned about the impact of bad weather linked to climate change, with an increase in wildfires in California among the most costly in recent years, something S&P said could see rates there jump 30-70%…