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Reinsurers push back as terms and conditions become reinsurance battleground

Autonomous said Guy Carpenter’s property catastrophe rate-on-line index was down 16% at mid-year, following a 12% decline at the January 1 renewal.

Reported · Written up by our desk · Reinsurance

Autonomous says reinsurance terms and conditions have become the new battleground after mid-year rate declines, with reinsurers broadly seeking to prevent any further loosening of contractual T and Cs.

In its refreshed contract analysis, the firm found stable attachment points in absolute terms, but not enough to keep pace with inflation or cedent growth. Autonomous also argued that the last hard market was defined as much by tighter T and Cs as by pricing, even as pricing has now shifted toward adequacy.

According to Autonomous, in the latest renewal rounds reinsurers have suggested T and Cs have held broadly stable, while brokers have pointed to some weakening in certain areas. The firm highlighted relaxation seen in clauses including hours clauses, named perils, extensions, and reinstatements.

Autonomous added that reinsurers have made a “big push” to shift away from out of frequency covers, also described as earnings protection, toward severity based approaches focused on balance sheet and capital protection. It said attention through 2027 is likely to center on whether cedents and brokers can successfully challenge treaty terms and design, potentially increasing loss exposure if outcomes favor buyers.

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