Non-life reinsurance is expected to continue growing, according to Swiss Re, which says the market will grow above GDP for the next decade, driven by new risk pools and supported by continuous rate adjustments. At the same time, they warn that capacity hinges on reinsurers making adequate returns commensurate with the risks being insured. 

“Evolving natural catastrophe risks will require a rebalancing between reinsurance capacity supply and increasing demand and adaptations in underwriting,” the company states, saying improved underwriting data, enhanced modelling and a rebalancing of the insurance value chain is needed for a sustainable reinsurance market.

“An important discussion point will be the balance between reinsurance capacity and increasing demand. Primary insurers are best suited to absorb frequency and attritional losses while reinsurers are reverting to their core function, which is supporting insurers from recovering from large loss events,” they write. “This trend towards a more sustainable balance in risk sharing is expected to continue.”

They also say following years of weak performance and above average natural catastrophe activity, the reinsurance market is reverting to a more sustainable level of risk-adjusted pricing. “This trend is expected to continue at the upcoming January 2024 renewals.” 

They also warn that natural catastrophe risks will require adaptations in underwriting. “Rising losses from natural catastrophes are strongly impacting the property re/insurance market. As demonstrated by the many events across the world in 2023, risk profiles continue to evolve and insured losses in excess of USD $100-billion per annum are expected to recur. Demand for natural catastrophe property reinsurance is likely to remain high as exposures keep increasing.”