While property reinsurance renewals experienced modest price declines at the mid-year renewals, casualty classes saw the greatest renewal premium increases, which could keep advancing, broker Gallagher has observed.
Talking about the reinsurance market and mid-year renewals following the release of its second quarter of 2024 financial results, J. Patrick Gallagher Jr, CEO, said: “Property reinsurance renewals saw modest price declines concentrated at the top end of reinsurance towers due to the increased capacity from both traditional reinsurers and the ILS market.
“Offsetting this was underlying exposure growth, combined with increased demand, resulting in flat year-over-year premium for reinsurers overall.
“U.S. Casualty renewals saw terms and conditions tighten and some modest price increases. Reinsurers continue to heavily scrutinise submissions given the industry’s unfavourable prior year reserve development, and reinsurers view of the current loss cost trends.”
According to Gallagher, the broker believes that insurance and reinsurance carriers continue to behave rationally and that rates are being raised the most where it is needed to generate an adequate underwriting profit by line, as well as by industry, and by geography.
For Q2 2024, Gallagher reported revenue growth of $2.73bn, driven by strong performance in its brokerage segment. Net earnings were at $332.8mn, up from $290.3mn in the same quarter of last year.
Gallagher noted that it continues to see sata differences between property and casualty lines. Property renewal premium increases are moderating while casualty classes are seeing large renewal premium increases.
The CEO stated: “Carriers believe property may be close to approaching price and exposure adequacy. And thus, we are seeing property renewal premium increases moderating, but mostly within large accounts.
“Underlying that, accounts with premiums around $1 million or greater are seeing renewal premiums flattish year-over-year. Yet on the other hand, in the small and mid-sized client space, where we are an industry leader, we are seeing increases of 7% for the second quarter.
“Shifting to casualty classes, we are seeing the greatest renewal premium increases and signs of these increases advancing. In fact, global second quarter umbrella and commercial auto renewal premium increases are in the high single digits, and there is little differentiation by client size.
Gallagher concluded: “We have been highlighting worsening social inflation, medical expenses and growing historical reserve concerns for quite some time. And thus, we continue to believe further rate increases are to come in casualty.”
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