| Trend | Range | |
|---|---|---|
| Non-CAT exposed |  |
-5% to +5% |
| CAT exposed |  |
+10% to +20% |
Key takeaway: 2024 has seen the return to stable reinsurance treaty renewals at both January 1 and April 1. January 1 saw pricing for property capacity remain relatively flat to modest rate increase for non-cat exposed accounts, and terms and conditions remain consistent from 2023. The positive trend continued at April 1, with global reinsurance capital increasing to peak levels. The increase in stable reinsurance capacity, combined with improved insurer results from market pricing corrections means insurers are now looking to deploy capacity and grow their book, thus driving competition to retain current insureds and underwrite new business. Despite this mandate to grow, insurers are still being diligent with their review of natural catastrophe perils, with a focus on valuation as inflation still looms.
Increased capacity in the Canadian market is driving competition
- Insureds with low natural catastrophe exposure and good loss histories can see rates range from -5% to 5%, depending on the industry and limits purchased, driven largely by increased competition; clients with challenging asset profiles and those with poor loss records are seeing larger increases as there is less competition for these risks.
- MGAs (managing general agents) continue to enter the market with a focus on specific coverages and industry sectors, providing capacity for distressed areas such as residential/frame property, and also providing an opportunity for direct insurers to deploy capacity behind the MGA structure.
Insurers maintain heightened focus on natural catastrophe perils
- The start of Q2 means increased focus on key natural catastrophe perils in Canada, most notably flood and wildfire.
- Insurers will continue to adjust their underwriting toward wildfire exposure, including specific wildfire deductibles and restricted coverage for locations within a certain radius of an active wildfire.
- For insureds with exposures in British Columbia and Quebec, insurers continue to model the earthquake zone, and charge rate and apply increased deductibles accordingly.
Inflation, valuation and loss control remain in focus for insurers
- Inflation continues to play a key role in renewals, as insurers look to ensure that values are appropriate. Insurers have seen an impact to their losses as inflation impacts the cost to replace and repair property. Where insurers do not feel confidence in the values reported, they will look to apply margin clauses (5% to 10%) or require an appraisal as a subjectivity. Insurers continue to apply business interruption volatility clauses to manage commodity price fluctuation, typically ranging from 10% to 15% with both an annual and monthly cap.
- Insurers continue to focus on supply chain, and the impact it can have from a contingent time element perspective across their portfolios. Insurers are requesting additional details from both a customer and supplier perspective and will manage the exposure via either sublimit or exclusion.
- Loss control and site surveys are also in focus and critical for insurers being able to write a risk. Some underwriters will not come onto a risk without updated engineering — or will make a site survey a subjectivity to come on risk.
Disclaimer
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).