UAE floods drive challenging and late mid-year renewals in the Middle East: Gallagher Re

While most property reinsurance placements were completed either early or on time, renewals in the Middle East were challenging and late, says reinsurance broker Gallagher Re.

According to Gallagher Re’s recent mid-year renewals report, this was mainly due to uncertainty around loss estimates for the recent floods in the United Arab Emirates (UAE).

These events have had a direct impact on the original property policies, analysts noted, as cedants are imposing increases in deductibles and prices, something that has been monitored by reinsurers.

The report also highlighted that the shift in program structures to pure quota share has intensified, with some programs seeing a more radical shift to gross XL.

Additionally, commission levels on pro rata treaties reduced between -2 to -1.5 points at the mid-years.

As reliance on catastrophe modelling increases, the Middle East has seen a reduction in the event limits for flood and rainwater accumulation.

At the mid-year property renewals in the region, Gallagher Re finds that sellers applied the recommended natural catastrophe loadings on premiums.

It was also noted that, at the mid-year renewals, there was an exclusion of facultative inward capacity in some cases.

Additionally, on excess of loss treaties there was an increase in buyers retentions with reinsurers adopting higher minimum entry return periods.

Globally, most property programs saw easing of pricing despite a rise in demand, but in the Middle East, price increases varied between +20% to +60% depending on the results.

According to the report, minimum top catastrophe layers rates on line were set at minimum 2% in most cases.