Reinsurance renewals

Reinsurance renewals are the periodic occasion on which cedants and reinsurers renegotiate the terms for renewing their treaties, namely price, capacity, attachment points, limits and clauses. These negotiations cluster around a few major dates, the most important being the first of January, which covers a large share of European and North American programs, followed by the first of April, dominated by the Japanese market, and the first of July, marked notably by US catastrophe risks. Renewals are far more than an administrative formality, they are the moment when the balance of power between the supply of and demand for capacity is concretely expressed, and therefore the most closely watched barometer of the underwriting cycle. A difficult renewal, where reinsurers impose price increases and a tightening of terms after a year of losses, signals a hard market, while a renewal favorable to cedants reflects a soft market and an abundance of capacity. For cyber reinsurance, recent renewals have been particularly scrutinized, because they reveal reinsurers' real appetite for a risk whose modeling and accumulation remain uncertain.

After a year of catastrophic losses, reinsurers approach the first of January renewal by demanding price increases and higher attachment points. Cedants find a hard market, where capacity is expensive and keenly negotiated.

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