Hannover Re expects better pricing conditions in Asian markets

Select primary insurers may raise their retentions to offset increased reinsurance costs.

Hannover Re expects continued price increases and enhanced terms for property and casualty reinsurance renewals on 1 January 2024. 

In China and India, Hannover Re secured better pricing and conditions during the current year's renewals, particularly for non-proportional reinsurance agreements. 

Despite relatively low natural catastrophe losses in the past two years, the impact of climate change is becoming increasingly evident.

In Australia and New Zealand, the upward price trajectory continued during the main renewal date on 1 July. Losses from flooding and windstorms in New Zealand contributed to these pricing adjustments.

Hannover Re also expects improved pricing and conditions in other Asian markets. Some primary insurers may raise their retentions to offset increased reinsurance costs, particularly in the natural catastrophe business, as they negotiate improvements in specific markets.

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Several factors drive this trend, including ongoing geopolitical uncertainties, the rising frequency and severity of natural catastrophes, persistently high inflation rates, and social inflation. 

These factors have led to significant increases in loss payments for both insurers and reinsurers, reinforcing the trend of higher costs.

Jean-Jacques Henchoz, CEO of Hannover Re, noted that while they have achieved improved pricing and conditions in recent renewals, these enhancements are insufficient given the persistently challenging risk landscape. 

He emphasised that adequate pricing is essential for providing effective reinsurance capacity. To support their clients and promote growth, Hannover Re will focus on innovation to enable risk transfer through traditional reinsurance and tailored solutions.