Despite difficult January 1st renewals, the outlook for agriculture business looks very promising for 2023, with growth opportunities for reinsurers, according to Aon’s January Reinsurance Market Dynamics report. Historically profitable markets saw only minor changes, but territories with recent losses experienced hardening terms, Aon analysts observed. These changes were driven by the outsized Brazil loss of 2021 – which developed and was quantifiable in 2022 -, the continued increase in commodity prices and the strengthening of the U.S. dollar. A shortage of capacity, along with the withdrawal of a major reinsurer and others having to reduce their agriculture portfolios, has also fuelled the hardening terms. Pro-rata capacity has been in short supply, as some reinsurers only offered pro-rata capacity in limited territories. Those continuing to support pro-rata were often able to improve terms and would only commit capacity if modelled margins showed a reasonable increase year-over- year. Despite these improvements, Aon noted, pro-rata treaties were difficult to fill out, and in certain territories, clients had to reduce their EPI to ensure full placement. On top of this, the strong dollar has meant that 40 percent more capacity is required over last year for the U.S., the world’s largest crop […]
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