U.S. property reinsurance rates rise by up to 50% on Jan 1-broker says

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© Reuters. FILE PHOTO: Oscar Petrona, 23, takes a break while making repairs to his house damaged by Hurricane Otis, in the El Pedregoso neighborhood, in Acapulco, Mexico, November 2, 2023. REUTERS/Jose Luis Gonzalez/File Photo
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LONDON (Reuters) – U.S. property catastrophe reinsurance rates rose by as much as 50% on the key Jan. 1 renewal date, broker Gallagher Re said in a report on Tuesday, as reinsurers look to recoup losses from natural disasters such as wildfires, storms and hurricanes.

Reinsurers provide insurance for insurers and the prices they agree at the beginning of each year set the trend for the cost of insurance for the next 12 months.

Earthquakes in Turkey and Syria, wildfires in Hawaii and other natural catastrophes caused an estimated $100 billion in insured losses in 2023, down from 2022 but still well above normal, reinsurer Swiss Re (OTC:SSREY) estimated last month.

U.S. property catastrophe reinsurance rates rose by as much as 50% on Jan. 1, 2024 for policies previously hit by natural catastrophes, while such rates doubled in Turkey, Gallagher Re said.

But reinsurance rates were unchanged for some clients who were not exposed to natural disasters last year, the report showed.

“It’s quite nuanced and much more differentiated by client than it was this time last year,” Tom Wakefield, global CEO of Gallagher Re, told Reuters.

Global property catastrophe reinsurance rates rose by as much as 30% on Jan. 1 for policies previously hit by losses, reinsurance broker Guy Carpenter, part of Marsh McLennan (NYSE:MMC), said in a separate report last week.

The conflicts in Gaza and Ukraine have focused reinsurers’ attention on war, political violence and terrorism policies, the Gallagher Re report said.

Political violence insurers are reconsidering the breadth of their cover in potential conflict hot spots, Reuters reported last month.  

Aviation reinsurance rates rose by as much as 25%, the Gallagher Re report said.

In the marine market, war risk premiums for ships to enter the Red Sea have risen tenfold since the outbreak of the Israel-Hamas conflict, Wakefield said.