What Canadian insurers paid for reinsurance in Jan. renewals

Reinsurance rate increases for catastrophes in Canadian property lines depended on whether the carriers’ portfolios took a hit last year, with 10% to 20% rate increases for catastrophe portfolios that took a loss, and 5% to 10% increases for those that didn’t, according to a January renewals report by Gallagher Re.

“Insured losses related to Canadian catastrophe events in 2021 were relatively tempered and primarily emanated from British Columbia,” Gallagher Re noted in its report, 1st View: Mixed Markets 1 January 2022. “Reinsurance pricing [was] further segmented by company-to-company year-over-year, and has become further dependent on individual buyer performance.”

B.C. flooding late in the year cost insurers about $450 million in damage payouts, according to Catastrophe Indices and Quantification (CatIQ), as reported by the Insurance Bureau of Canada.

For some Canadian reinsurers, global catastrophe losses influenced rate pricing, particularly on layers that had loss activity, Gallagher Re observed in its report.

Canadian primary insurers without significant losses in 2021 did not see as much pressure from reinsurers for rate increases, Gallagher Re reported.

In addition, third-party liability insurance — generally packaged with property-related policies in Canada — didn’t see the same kind of pressure for increased rate as in specialty and personal accident business.

In specialty lines, aggregate stop loss reinsurance rates for cyber increased by between 15% and 20%. Aggregate stop loss is reinsurance that kicks in at a certain limit, so that employers are protected from losses that exceed their expectations (i.e. as expressed by a cap).

“The very significant underlying rate increases and improvements in terms and conditions [in global cyber] observed in late 2020 and throughout 2021 are being further compounded with reinsurers seeing benefits flowing through into this year’s renewals,” Gallagher Re reported. “Whereas primary cyber markets are truly hard, the reinsurance market is hardening with capacity still available on a pro rata basis, though there was more pressure on capacity for aggregate stop loss covers…

“With primary cyber insurers deploying an increased [use] of more advanced technologies and underwriting techniques, as well as portfolio optimization through improved risk selection, there were early signs that reinsurers are starting to differentiate by ceding company.”

Feature photo courtesy of iStock.com/wwing

David Gambrill