45% expect to use more ILS & third-party capital at renewals: Survey results

We’ve just published the results of our latest global reinsurance market survey, in which we polled market participants on the state of the market as the key mid-year renewal season fast-approaches.

Artemis and our sister publication Reinsurance News polled our email and Linkedin subscribers over the last ten days, asking a range of questions designed to take the temperature of the reinsurance market as the all-important Florida and mid-year renewal discussions reached their peak.

Hundreds responded and we’re already making the full survey results available to view online here, hoping this adds some insights into developing reinsurance market sentiment, especially the sentiment of protection buyers.

One particularly interesting finding of our reinsurance market survey is specific to the capital markets.

It seems buyers of reinsurance and retrocession are much more open to using insurance-linked securities (ILS) or other third-party capital backed products at this renewals.

In fact, some 45% of respondents said that they expect to use either a little more, or much more, in the way of ILS or third-party capital in their reinsurance or retrocession arrangements at mid-year 2022.

35% of our respondents said they expect to use a little more ILS or third-party capital backed reinsurance and retrocession, while 10% said they expect to use significantly more.

Before the ILS market get too excited though, it’s also worth highlighting that while 38% of buyers expect roughly the same amount of ILS or third-party capital in their reinsurance towers, 17% expect to use less alternative capital at the renewals as well.

Positively, the data suggests reinsurance and retrocession buyers are becoming increasingly inclined to add more ILS or third-party capital to their programs this year.

Prior to the January renewals, our last reinsurance market survey results showed that 38.5% of respondents were expecting to add more ILS backed capacity to their towers.

So, this has increased over the course of the year, perhaps suggesting increasing acceptance of alternative capital, or maybe reflecting the reduction in capacity available for certain layers of risk right now, due to reduced reinsurer risk appetites.

Although, it is also worth noting that the mid-year renewals feature the accepted sweet-spot peak zones of US hurricane risk, where the ILS market has always been a more significant player.

We’ll report on more interesting findings from the survey over the coming days and you can access the full results here.