Reinsurance renewals
The periodic negotiation in which cedants and reinsurers renew and adjust their treaties, an annual barometer of the market cycle.
On January 1, 2023, three months after Hurricane Ian came ashore in Florida on September 28, 2022, reinsurers got what they had not had for years: clear rate rises and higher attachment points. Many cedants now retain the low, frequency-exposed layers. Some treaties were only signed in the last days of December. The renewal is the date on which cedants and reinsurers renegotiate price, capacity, retentions, limits and clauses. It clusters on a few dates. January 1 carries a large share of European programs and a good part of US and global ones. April 1 is dominated by Japan. June 1 belongs to Florida, and July 1 to other US catastrophe programs and to Australia. That is where the balance between supply of and demand for capacity shows up in numbers, and reinsurance brokers publish their rate indices within days. A hard market shows in increases imposed after a loss year, a soft one in capacity competing for every line. In cyber, renewals show how far reinsurers will go on a risk whose accumulation is still poorly modeled. That is why that market still runs mostly on quota share.
Textbook case: after a year of catastrophic losses, reinsurers approach the first of January renewal by demanding, as on January 1, 2023 after Hurricane Ian, price increases and higher attachment points. Cedants find a hard market, where capacity is expensive and keenly negotiated.
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