Youi, a prominent Australian insurance company under the Outsurance Group umbrella, has decided not to renew its aggregate reinsurance for the 2024 financial year, due to the current hard market conditions.
This strategic move reflects a broader trend in the industry as insurers grapple with escalating natural perils losses and pandemic-related business interruptions that are causing the insurance market to harden.
During a hard market, underwriting gets tougher and more stringent, as they become more sophisticated, looking closer at losses, safety records, and financials. The global reinsurance market has been witnessing a significant hardening trend since 2021, driven by increased losses from natural perils and the effects of rising inflation.
Australia, in particular, has suffered in regards to this hardened market, due to the surge surge in both the frequency and severity of natural disasters prompting a robust response from the reinsurance market.
The move marks a pivotal moment for Youi, which has historically relied on aggregate natural perils treaties to manage its risk exposure to large-scale catastrophic events.
Starting from July 1, 2023, Youi will shift its reinsurance approach by participating in the Cyclone Reinsurance Pool, a government-backed initiative aimed at providing coverage for cyclone-related claims.
This strategic shift is expected to significantly reduce Youi’s exposure to large cyclone events, consequently reshaping the company’s reinsurance structure for the upcoming financial year.
Copyright © 2023 FinTech Global