Reinsurance rate increases continued for most major lines and territories during the June and July renewal period, according to Willis Re’s 1st View report.

However, the report found that in many cases reinsurers had to accept firm order terms below their initial quotes. It said that showed the market is approaching equilibrium.

Willis Re’s 1st View looks at the state of the market at important reinsurance contract renewal periods. It found that momentum has also continued in the catastrophe bond market, which saw around $6 billion of new issues in the second quarter of this year, outstripping all new catastrophe bond capacity issued in 2019, according to the report.

It noted there were good first quarter results for reinsurers, with “low catastrophe losses, rising underlying reinsured premium volumes, positive investment trends, and the strong economic recovery from Covid-19 related economic pressures together moderated rate increases, despite reinsurers’ best efforts to maintain pricing momentum”.

Another key finding was the capacity overall remained more than sufficient to meet demand, but reinsurers resisted the temptation to compete for top-line revenue, so capacity for poorly performing classes was constrained.

The report said concerns over inflation and Covid-19 related loss developments had no impact on pricing with flat or modestly rising rates for property renewals.

James Kent, global chief executive officer of Willis Re, said: “The two major current market concerns of inflation and Covid-19 related losses had limited impact on the [June 1 and July 1] renewals. The slow ongoing development of Covid-19 related losses under many original policies and the subsequent delayed development of reinsurance losses has showed little change in the last three months. This led to renewals largely not considering Covid-19 losses whose ultimate development still remains unclear.”

Mr Kent said ESG, (environmental, social and governance) is taking a more prominent position in the global reinsurance industry’s corporate strategy. He added: “But any concrete action in terms of adjusted underwriting approaches remained limited at July 1 other than on specific coal and other heavy fossil fuel related facultative reinsurance, where a growing number of reinsurers are scaling back their activities or withdrawing from such lines of business.”