What needs to happen for a smooth 2025 reinsurance renewal season

Momentum from this year’s favourable reinsurance renewal can continue into 2025 if outlying conditions and losses don’t exceed expectations, panellists said during Cat IQ Connect in Toronto. 

Although it’s too early to make assertions about how the next 1.1 renewal season will shape up, reinsurance experts discussed the factors that need to continue for reinsurance to remain orderly into 2025. 

“As long as ceded losses are in line with expectations, I think it provides for a smoother year,” Gus Katsuras, EVP and head of property, Canada, at Gallagher Re Canada said during the Renewals Season Recap panel discussion.  

“When you have successive years of profitability…you’ll have new entrants potentially, you’ll have capital growth, and I think it’ll increase supply, and I think pricing can slowly start coming back a little bit.” 

After several years of high reinsurance demand and low supply, the Jan. 1, 2023 reinsurance renewal season in Canada saw hefty premium hikes for insurers seeking reinsurance coverage for their Cat losses. 

Results settled back down for Jan. 1, 2024 renewals, with many property catastrophe rates in the high single, to low double digits for non-loss portfolios, to 20% to 30% increases for those with losses — a far cry from the previous year’s 50% to 70% increases for carriers with Cat losses.  

On the reinsurance side, Olivier Gay, president, CEO and chief underwriting officer at SCOR Canada, emphasized the need for more robust data from carriers in 2025. He said that will make it easier for reinsurers to price their rates.  

“The more data you can share, the easier it will be for the reinsurance industry to properly assess the risk and price it.” 

Yet, he acknowledged there are factors in play this year that could adversely affect reinsurance in 2025.  

For one, Gay said, secondary perils (i.e., hail, flood, storm or wildfire), are becoming more severe and frequent, and that could impact reinsurance.  

“I think that the Cat risk is underpriced today, on the insurance side and on the reinsurance side,” he said. “We know what we’re facing…So [let’s make] sure that we don’t create a protection gap as an industry.” 

He pointed to the United States, namely California and Florida, where insurers are withdrawing coverage due to their overexposure to Cat risks. 

“As Canadians, we should not allow what some people in Florida and California are facing today; being forced to self-insure their property against winds or hurricane or a wildfire.” 

But there is also geopolitical risk, and that could affect reinsurance moving forward.  

Gay referred to Russia’s invasion of Ukraine, and the conflict in Gaza. “[This] may turn into a real pain because of the supply chain disruption…on oil and goods through the Red Sea.” 

Inflation may also affect global reinsurance in the coming year, he added. “All those uncertainties can have an impact on the overall 2025 renewal.” 

On the primary carrier side, Anna McCrindell, SVP & COO, East, at Wawanesa Insurance, emphasized insurers want “greater transparency, flexibility and collaboration” from their reinsurance partners in 2025.  

She discussed how primary carriers want to work with reinsurers and brokers who can help address their specific needs, and create tailor-made policies. 

“Helping us understand the rationale, the assumptions, understanding how reinsurers are quantifying our risk, what factors are driving their decisions — I think that’s transparency,” she said.  

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