REINSURERS PREMIUMS

Reinsurers’ premiums to rise as inflation bites, say rating agencies

Reinsurers are likely to raise premium rates in the next few months, given pressures from inflation, the war in Ukraine, climate change and capital market volatility, ratings agency analysts said yesterday.

Reinsurance is also known as insurance for insurers or stop-loss insurance. Reinsurers such as Swiss Re, Munich Re and the Lloyd’s of London market help insurers share the risk of disasters in return for part of the premium.

They have been raising rates in the past few years to recoup losses from natural catastrophes such as hurricanes and wildfires, the Covid-19 pandemic and from sanctions on Russia and counter-measures due to the Ukraine war.

“We do expect rate rises to continue,” S&P Global lead analyst for insurance Ali Karakuyu told a media briefing.

“Depending on the segments that you are looking at, the rate rises will vary, but on average, I’d say mid-single digit (percent).”

A survey of reinsurance buyers published by ratings agency Moody’s yesterday showed most respondents expect reinsurance rates to rise next year.

Property rates in the US and Caribbean market – exposed to natural catastrophes – were expected to rise particularly strongly, in the “high-single to low-double” digit percent range, the survey showed.