Howden Re, a prominent reinsurance broker, has reported a decrease in pricing for key reinsurance lines during the April 1st renewals, particularly in Japan, where catastrophe excess-of-loss rates fell by 10% to 15%. This marks a continued softening of the hard market that began in recent years.
Japan remains a critical market for reinsurers due to its large volume of business, relatively uncorrelated risk, and comprehensive underwriting data. In this context, reinsurers in Japan have been focusing on maintaining or expanding their market share, which has become increasingly competitive. Pricing reductions come after the elevated levels that were set following typhoon-driven losses in 2018 and 2019.
Although major natural catastrophes in the Asia-Pacific region were limited in 2024, notable events included the January Noto earthquake, Taiwan’s Hualien earthquake in April, and Typhoon Yagi in September. Despite this, Japan’s cedents opted for reduced limits at the lower end of their programmes while seeking additional top-layer protection.
In the proportional earthquake cover segment, cedents saw an average ceding commission increase of about two percentage points, reflecting improved terms.
In specialty reinsurance markets, the outcomes were mixed. Aviation reinsurance rates remained flat, showing stability compared to the 3.5% reduction observed earlier in the year. Russian leasing losses continued to influence treaty negotiations, while the marine and energy sectors welcomed new capacity. Despite some downstream losses in 2024, the impact on April placements was minimal. Additionally, the March 2024 Baltimore bridge collapse, which occurred just after last year’s renewal, attracted significant attention.
Terrorism reinsurance pricing saw a modest decline, in line with the broader softening of the direct insurance market.
Howden Re also noted that reinsurance capital levels have rebounded, exceeding the previous peak recorded before the downturn in 2022. This recovery, driven by strong catastrophe bond issuance and inflows into insurance-linked securities, has helped sustain capacity and contributed to the moderation of prices in the market.
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