Fitch Ratings predicts reinsurance rates will increase by more than 10 percent in catastrophe-related lines of business for January 2022 renewals, which supports the improving sector outlook for 2022.
Fitch said it expects a double-digit rate hike for property catastrophe insurance in 2022 after insured losses of around $100 billion in 2021 and the prospect that natural catastrophes are increasing in frequency and severity. Price increases should be most pronounced in Central Europe, which was hit by severe floods in July 2021 that caused around EUR10 billion in insured claims.
Fitch noted that lines like cyber risk and directors and officers (D&O) liability are also likely to report double-digit price increases, citing ransomware attacks and social inflation among the causes, respectively. Fitch said it also expects risks to emerge from contested pandemic-related health and safety measures as well as liability risks connected to environmental, social and governance.
Fitch said 2022 will be the fifth successive year of price rises, although growth is expected to be slower than in 2021.
Fitch added that it expects inflation to “ease again in 2022 as supply responds. Recent price increases in property lines of business are sufficient to compensate for upwards pressure on claims inflation as repair costs for housing or vehicles rise, while long-tail casualty lines will only start to suffer in the event of a prolonged effect of multi-year inflation above expectations.”
Source: Fitch Ratings
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