U.S. Surety reinsurance risk adjusted rate reductions have continued into the start of 2018 with the market still characterised by abundant capacity, however, rate reductions were lower than those of previous years due to some price increases seen in loss affected programmes, according to Willis Re.
Some loss affected treaties renewed with no real sign of genuine rate increases, and after several years of price declines, Willis Re noted that certain reinsurers “being more price disciplined, reduced shares or exited programs.”
Despite loss frequency for reinsurers increasing with higher severity in some areas of the market, the U.S. surety industry continued to report strong results through the third quarter of 2017 and structures remain largely unchanged.
Buyers continue to favour breadth of coverage along with seeking relaxation of administrative burdens.
Reinsurers continued to differentiate among buyers with markets continuing to support good performing programmes with concessions where underwriting expertise and prudent market cycle management are apparent.
Overall, it appears the U.S. surety reinsurance market has kicked off 2018 with no significant change in soft market conditions that support a softening of terms across placements, despite market resistance toward rate reductions.