A briefing issued last week by Guy Carpenter & Company, LLC, a global risk and reinsurance specialist, found that reinsurance rates are continuing to increase for the U.S. property/casualty reinsurance market. The report, titled “Rates Up on Tightening Capacity at U.S. 4/1 Prop-Cat Renewal,” highlighted numerous, important findings, including:

• National programs rose between 10% and 14% on a risk-adjusted basis, with the Northeast seeing a 6% to 8% increase. Risk-adjusted pricing was up 12% to 14% on average for residual markets, though results varied widely, depending on risk pool characteristics.
• By comparison, reinsurance rates increased 11% on average at the January 1, 2009 renewal.
• Quoting behavior varied widely, ranging from -15% to 15% for certain programs. Capacity needs, regions, and specific perils were among the factors influencing the final rates that insurers were able to secure.
• For the U.S. market, firm order terms (FOTs) ended up at 94.8% of average quotes – 80.5% of the top quote and 110% of minimum quotes. Increases were less pronounced in the Northeast, where higher layer FOTs discounted 8% to 10% relative to quotes, with lower layers at 10% to 12% discounts.

Other points contained in the briefing include information on available capital within the market and an update on Florida renewals.

The entire briefing is available here.

Emily Holbrook
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