Reason and logic govern firming reinsurance landscape: Willis Re 1st View

Arlington, VA (Jan. 4, 2021) – Despite the impact of COVID-19 both on working conditions and exposures – and with discussions of the latter largely deferred until after 1 January treaty renewals – reinsurers have largely arrested the persistent downward trends which characterised recent years. For buyers, terms and conditions have overall been less onerous than initially feared again revealing the efficient working of the global reinsurance market, according to the latest 1st View renewals report from Willis Re, the reinsurance division of Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company.

Improving investment markets, retained earnings and newly raised capital helped global reinsurance capital levels to recover rapidly during 2020, ending the year 3% higher than at year-end 2019.

Buyers seeking reinsurance for short-tail portfolios with poor loss records found the renewal demanding, as reinsurers proved reluctant to support aggregate and working layer covers, but appetite for higher, loss-free layers was greater.

In casualty lines, negotiations of pro-rata treaties were more buyer friendly as a result of underlying rates increasing consistently and significantly. In some cases buyers balanced demands for reductions in ceding commissions by opting to increase net retentions of risks that they now believe are adequately priced. Incumbent reinsurers faced competition from carriers deploying fresh capital, but the continuing and worsening low-interest-rate environment and social inflation impacted pricing on all excess of loss long-tail lines.

Property retrocession capacity remained limited, but not to the extent many expected, particularly as some ILS funds increased their assets under management, traditional reinsurers offered new or additional limit, and some buyers sought to acquire less cover. Aggregate capacity however was more constrained than occurrence, which led some buyers to respond with increased issuance of catastrophe bonds.

Emerging COVID-19 losses, often advised only late in the renewal process or yet to be advised, triggered technical discussions of primary policy coverage and reinsurance treaty wordings. Both remain in the early stages of deliberation, so, sensibly, most programmes renewed without conclusion of potential COVID-19 losses, leaving time for more measured discussions and subsequent adjustments. In the interim, reinsurers have been unwilling, with few exceptions, to accept ongoing contagious disease exposures.

James Kent, Global CEO of Willis Re, said: “2020 brought vast economic and social disruption to many parts of society. It is important to recognise our fortune as being part of an industry that continues to grow in relevance, and which has the potential to adapt to meet such challenges. This was reflected during the renewals process, as the resilience of the reinsurance sector shone through, not just to losses, but to working challenges. Once again, the dynamics of the sector have proved robust on all fronts.”

Download the full report: The Willis Re 1st View report is a thrice-yearly publication including specific commentary on key trends throughout the world’s major reinsurance classes and regions.

About Willis Re

One of the world’s leading reinsurance brokers, Willis Re is known for its world-class analytics capabilities, which it combines with its reinsurance expertise in a seamless, integrated offering that can help clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world’s top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker’s global team of experts offers services and advice that can help clients make better reinsurance decisions and negotiate optimum terms. For more information, visit

About Willis Towers Watson Securities

Willis Re Securities, with offices in New York and London, provides capital markets services and products to companies involved in the insurance and reinsurance industry including acting as underwriter or agent for primary insurance-linked securities issuances, operating a secondary insurance-linked securities trading desk and engaging in strategic advisory work. Willis Re Securities is a trade name used by Willis Securities, Inc., a licensed broker dealer authorized and regulated by FINRA and a member of SIPC, Willis Towers Watson Securities Europe Limited (Registered number 2908053 and ARBN number 604 264 557), an investment business authorized and regulated by the UK Financial Conduct Authority.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at

SOURCE: Willis Towers Watson

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