US cat business will continue to be attractive to reinsurers next year as demand continues to rise, according to Hannover Re.
At its annual Rendez-Vous press conference in Monte Carlo, the reinsurer said securing higher retentions on North American cat business over the past two years had led to “satisfactory results”.
With inflation high and loss severity increasing, Hannover Re said it expects rising demand for US cat capacity next year.
In Europe, Hannover Re noted a number of natural disasters in the past few years, with losses worsened by high inflation and supply chain disruption.
It added given the severe floods that struck southern Germany in the summer, “further efforts are needed to support catastrophe business on a sustainable basis”.
Hannover Re said reinsurers showed “considerable discipline” at 1 April, with demand broadly stable. It added that substantial flood, typhoon and hail losses in the past two years highlight the need to price in all climate-related perils in Japanese cat business.
For Australia and New Zealand, Hannover Re noted an absence of major cat events in 2024, after several years of major losses. With insured values still rising, however, the carrier expects additional demand for cat cover and said it would focus on achieving “commensurate prices and with adequate retentions”.
Hannover Re also highlighted the impact of social inflation on casualty claims costs and the “challenge” this presents to the insurance industry.
Sven Althoff, board member with responsibility for P&C, said the carrier will continue to avoid large-limit casualty exposures as well as classes of casualty with exposure to bodily injury, given the increasing frequency of bodily injury awards over $10mn.
Overall, the carrier said it had continued to achieve risk-adjusted price increases at each major renewal in 2024 so far.
It noted, however, that some primary insurance markets are seeing modest price reductions, adding that it still prefers to write non-proportional business for that reason.
Hannover Re CEO Jean-Jacques Henchoz said: “We want to grow with our clients and continue to offer them the best possible coverage and capacity. To do this, rate levels must remain adequate.
“Insured losses are still trending higher. In view of the various challenges facing the industry, reliable reinsurance protection is indispensable.
“In line with our strategy, we remain well positioned for profitable growth and a preferred business partner with our clear focus on reinsurance, our excellent underwriting expertise and our very strong capital base.”