Reinsurers have largely arrested multiyear downward trends in the market, despite the impact of the Covid-19 pandemic on working conditions and exposures.

That is one of the findings in Willis Re’s 1st View survey report, which was published yesterday following the January 1 renewals.

Global reinsurance capital levels recovered last year, ending 3 per cent higher than the previous year, thanks to improving investment markets, retained earnings and newly raised capital.

The report found that buyers had found terms and conditions at renewal were not as onerous as they had featured, something which Willis Re said revealed the efficient working of the global reinsurance market.

Emerging losses from Covid-19 have either been advised late in the January 1 renewal process, or have yet to be advised, according to the report, and have triggered technical discussion of primary policy coverage and reinsurance treaty wordings. The report noted that “both remain in the early stages of deliberation, so most programmes renewed without considering any potential Covid-19 losses, leaving time for more measured discussions and subsequent adjustments”.

In commentary on property reinsurance, the report said Lloyd’s and Bermuda-led carriers “appeared more principled on strict exclusions, frequently resulting in reinsurer panels shifting towards continental European carriers”.

James Kent, global chief executive officer at Willis Re, said: “The renewal season has proved that the global reinsurance market has an extraordinary operating resilience, with working from home being the norm and traditional face-to-face meetings, an integral part of our business, no longer being possible in the vast majority of countries.

“As lessons are digested the reality is that our way of working will evolve more rapidly than would have been the case pre-Covid-19, with companies already updating operating models for the future. 2020 brought vast economic and social disruption to many parts of society. It is important to recognise our fortune as being part of an industry that continues to grow in relevance, and which has the potential to adapt to meet such challenges. This was reflected during the renewals process, as the resilience of the reinsurance sector shone through, not just to losses, but to working challenges. Once again, the dynamics of the sector have proved robust on all fronts.”

The report showed that in casualty lines “negotiations of pro-rata treaties were more buyer friendly as a result of underlying rates increasing consistently and significantly”, while property casualty retrocession capacity remained limited, “but not to the extent many expected”, as some ILS funds increased funds under management, traditional reinsurers offered new or additional limit, and some buyers took less cover.

Willis Re, the reinsurance arm of Willis Towers Watson, issues its survey report three times a year, giving a view of market conditions within the reinsurance industry, covering the changes in pricing levels and conditions experienced by Willis Re brokers and product experts.

The full report can be found at https://tinyurl.com/y3j765m6