Pricing trends in the private D&O segment remained slightly negative in Q4 with soft market conditions expected to continue through 2025, but in cyber the impact of rising claims frequency will likely trigger a shift in soft market dynamics in the second and third quarters of the year, according to CRC.
Rates
The property insurance market reached equilibrium in Q4 as pricing flattened out, but the ongoing California wildfires highlight an uncertain future according to CRC, which just released its latest REDY pricing index.
Red Sea marine war risk rates had fallen on the prospect of yesterday’s long-awaited ceasefire agreement between Israel and Hamas, but sources have said there could be some market resistance to another rapid or more significant drop.
Shares in Zurich, Scor and Conduit Re have been “oversold” in response to the devastating California wildfires, according to Berenberg, with all three firms highlighted as potential beneficiaries from expected catastrophe-driven rate hardening.
Losses from the Los Angeles wildfires, as well as recent regulatory changes allowing reinsurance pricing and modelling to be factored into filings, mean that both personal and commercial property insurance rates in California are likely to “significantly increase”, KBRA has commented.
There are signs of stabilisation in several segments of the US insurance market as it enters 2025, although challenges remain across multiple classes, including regulatory pressures and changing conditions, according to USI.
The commercial insurance composite rate increase moderated sequentially to 2.6 percent in the fourth quarter, according to MarketScout, which reported the composite rate increase for the year was 3.8 percent.
Reinsurers should be careful of having “too much of a good thing” and instead focus on being “reliable partners” in volatility management of catastrophe risk for their primary insurance clients, according to Guy Carpenter’s John Trace.
Risk-adjusted rates on line for retrocession catastrophe XoL placements were down by 10 to 20 percent at 1 January, according to broker Howden.
Reinsurers exercised greater flexibility at the 1 January 2025 renewals as a result of expanded available capacity, with loss-free property catastrophe programs able to secure "incrementally improved" terms, according to Aon.
