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Reinsurers, who help insurers shoulder the burden of large
losses in return for part of the premium, meet next week at
their annual conference in Monte Carlo to hammer out next year's
deals with insurers.
Reinsurance rates have been falling for several years due to
competition in the sector, including new entrants, and also due
to declining demand following low levels of natural catastrophes
in the developed world.
Hurricane Harvey, which may have caused $10-20 billion of
insurance losses according to estimates, is not large enough to
reverse the declining trend, analysts from S&P Global and Fitch
said.
"You’d need to see a bigger cat (catastrophe) event to really
have some impact on price," Dennis Sugrue, senior director at
S&P Global, told a briefing.
Sugrue expected rates to fall by up to 5 percent at Jan 2018
renewals.
Moody's also said this week that Harvey was unlikely to affect
global property reinsurance rates.
Graham Coutts, EMEA head of reinsurance at Fitch, told a
separate briefing that rates might fall by up to 7.5 percent,
following similar declines at July renewals.
However, further U.S. hurricanes could lessen those declines, he
said.
Hurricane Irma, a powerful Category 4 storm, headed toward the
Caribbean and the southern United States on Tuesday as islands
in its path braced for possible life-threatening winds, storm
surges and flooding.
"It very much depends on what happens in the rest of the
hurricane season," Coutts said, adding that if Irma were to hit
Florida, "you might see a flatter renewal".
Insurance specialists expect rates to rise in areas directly
affected by Harvey, however, due to increased demand for flood
insurance.
"It will lead to some further localized (price) tightening in
and around coastal areas and probably more specifically
Houston," Duncan Ellis, U.S. property practice leader at broker
Marsh, said.
(Additional reporting by Noor Zainab Hussain)
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