Reinsurers are unlikely to relax strict conditions in the January 2024 renewals, including risk retention rates for insurance companies and other stringent terms and conditions that they imposed in recent years, according to Misr Insurance Company CEO Amany Elmahy.
She told Al Mal News that the increased demand for property reinsurance coverage had been met, but at the same time, the market had not budged from the increased retention requirement and strict terms and conditions that were implemented previously.
Ms Elmahy expects that reinsurance rates for property catastrophe risk would rise, attributing this to loss rates in the sector. At the same time, reinsurance companies are looking to attract more capital, so they focus largely on the upper and middle segments of the market.
She explains that reinsurance renewals in January 2024 seem less contentious, but they are economically painful to insurers compared to last year, because of higher prices.
Ms Elmahy said that the global reinsurance market is still facing an imbalance between the growing demand for protection and capital flows into the sector are slow, while the tightening renewal market in January 2023 provides less capacity amid fundamental shifts in pricing.
Ms Elmahy said that secondary risks will be a strong focus in January 2024 reinsurance renewals, with reinsurers supported by the results they are witnessing, as they seek to avoid recurring losses thanks to improving conditions.
She said that property and liability reinsurance premium rates will jump by at least 10% in general, with loss-making portfolios to see an increase of approximately 30%. Reinsurers will seek to maintain the retention rate to cope with exposure to exchange rate changes and inflation.
Insurance Federation of Egypt reinsurance committee chairman Khaled Yousry said international reinsurance companies have reduced their dealings, a move which has greatly affected the size of their absorptive capacity, especially after the 2020 Beirut Port explosion, the 2023 earthquakes in Türkiye, Syria and Morocco and the 2023 Derna hurricane in Libya.
He said that reducing the limits of compensation amounts for a single accident will prompt insurance companies to periodically review the proportion of business ceded for some natural hazard risks. This is to ensure that insurers remain within the reinsurance coverage limit and would not be forced to purchase additional coverage from reinsurers.
He said that insurance companies will reduce coverage for natural hazards by 20% in areas with moderate weather conditions, while the decrease will be higher in areas adjacent to mountains and seas. M