2017 was filled with extreme weather of historic proportions.Across the globe, hurricanes, earthquakes and wildfires, to name a few,swelled to catastrophic levels.

With the recent catastrophe loss estimates in the U.S. at $136billion, 2017 is proving to be one of the worst loss years onrecord for the global reinsurance market. Fortunately, traditionalreinsurers remain strongly regulated and capitalized while beingsupplemented by the continued growth in Insurance Linked Securities(ILS) capacity, according to the Willis Re 1st View report for January2018. The report, provided three times a year, deliversthe first view on current market conditions at the key reinsurancerenewal seasons: January 1, April 1 and July 1.

In reviewing the events of 2017, the report notes that theglobal reinsurance industry has helped to alleviate the impact ofthe losses. The speed of claims payments from reinsurers to theirclients has been "exemplary," the report says,particularly in the Caribbean where many primary companies arehighly reinsurance dependent. Requests for advance payments havebeen promptly settled and "the true value and purpose ofreinsurance has again been reinforced."

As the risk for further extreme weather events remains imminent,the report notes that the role of reinsurers in 2018 and beyondwill prove "crucial" in alleviating the impact of futurelosses. 

The report reflects on the property, casualty, specialty andcapital markets in 2017. Keep reading to learn some of the keytakeaways from this report, organized by region.

Related: California wildfires expected to cause recordinsurance loss, Aon reports

(Photo: Shutterstock)

Property markets by region

• Asia: Overall price movements pointsto risk-adjusted flat but there were diverging views on how to makethat calculation. 
• Australia: Reinsurer appetite remainslimited for low-level catastrophe layers and aggregate covers; as aresult, pricing remains challenging in this area.
• Europe-wide: With the exception of somesmaller, more regionally impacting events, Europe as a whole hasseen a benign catastrophe year during 2017.
• The Middle East and NorthAfrica: Markets continue to stay competitive asit achieved a risk-adjusted flat renewal for loss-free programsdespite higher initial expectations.
• Latin America: Despite the maincatastrophe events to affect the region in the third quarter of2017, losses have not changed Latin American reinsurer appetite andcapacity remained at previous levels. 
• United States —Nationwide: Significant extreme weather events inthe third and fourth quarter of 2017 resulted in a slow-developingrenewal season, with reinsurers initially pushing for significantincreases; however, these were mostly discounted as firm orderscame in late and well below most reinsurers'expectations. 

Related: This $15 billion reinsurer decided to get out ofstocks entirely

(Photo: Shutterstock)

Casualty by territory

• Australia: Most reinsurers sought aminimum risk-adjusted flat rate for non-loss affected programs andrate increases for loss affected accounts; however,the range of rate changes varied widely. Reinsurerappetite for cyber continued to grow, outstripping demand frombuyers.
• Europe — General Third PartyLiability: The renewal season has focusedprimarily on pricing rather than technical or coverage issues.Traditional reinsurance leaders have been seeking substantial rateincreases and consequently, there has been a wide range in quotedterms.
• United States — MotorLiability: Personal and commercial auto carrierscontinue increasing rates across the country to offset increasedclaim frequency and severity.
• United States — Workers'Compensation: Heading into 2018, the workinglayers are facing a tightening market as primary pricing has beendecreasing, resulting in reinsurers raising prices to offset thesedeclines. 

Related: Lives reclaimed: Understanding the hurdles faced byinjured workers

(Photo: Shutterstock)

Specialty: Commentary by line of business

• Global — Cyber: Reinsurersanticipate increased demand as a result of forthcoming General DataProtection Regulation and similar regulations; however, U.S.businesses still predominates.
• Aerospace: After many years, signs offirming in both the aviation insurance and reinsurance markets hasbeen evident. 
• Marine: New capacity came into themarket in anticipation of the hardening market, reducing the impactof the rate increases. 

Related: Cyber insurance soaring as risksrise

(Photo: Shutterstock)

Capital markets

• ILS investors have suffered a considerable amount of naturalcatastrophe losses in the second half of 2017. 
• Merger and acquisition transaction volume in the globalreinsurance sector finished 2017 on a par with 2016's $49billion.
• As usual, North American activity led the way withapproximately $23 billion of deal volume, followed by Asia and thenEurope. Globally, life insurance deals outpaced non-life by a widemargin.

Although the numbers may lead some to think it has been adisappointing time for reinsurers, this perception needs to bebalanced against the aptitude of the market to provide buyers withthe stability of capacity at reasonable prices with an orderlyrenewal process. As we enter 2018, the role of reinsurers and itscontinued development will be vital for market stability across theglobe.

For more information, or to obtain a copy of the report, visitWillis Re's website.

Related: 4 things to know before engaging a weatherexpert