DAILY NEWS Oct 11, 2007 5:07 PM - 0 comments

Canada’s soft market: five more years?

TEXT SIZE bigger text smaller text
Canada’s reinsurance market is flush with enough capital to sustain a soft market for another five years, according to a reinsurance broker speaking at a Professional Liability Underwriter Society (PLUS) Canada chapter education seminar in Toronto.
“I believe, firstly, that the soft market has a long, long way to go down yet,” said Jonathan Beach of Beach & Associates Ltd. “The reason I say that is that there is so much capital swishing around in the market.”
“Barring catastrophes, which are obviously impossible to predict, I believe we are in for another five years of a softening market,” he said.
That news is not necessarily good for the Canadian reinsurance industry, added Tim McCoy of Signet Star Re of Greenwich Connecticut. McCoy agreed with Beach that because the insurance market is overcapitalized, the industry could see a continuing soft market for the next three to five years.
McCoy said a member of RIMS told him that U.S. commercial rates saw an increase of up to 50% during the hard market period of 2000-03. “In the last three years, we’ve already given back on those large accounts more than half of that,” he noted.
Christopher Suarez of Odyssey Re in New York agreed U.S. reinsurers had managed to achieve 20%-40% rate increases on good accounts during the post 2001 hard market. “In the last 24 months,” however, he noted, “we’ve given most or all of that back, so where we are now, in our viewpoint, is at a level of premiums close to [the hard market of] 2001.”
Beach noted reinsurers tend to make up for rate reductions by offering smaller coverage limits to insurers. He observed, for example, that reinsurers tend to offer insurers limits of US$10 million or US$15 million, rather than US$20 million. Also, he noted, reinsurers are now more likely to offer single-year policies, whereas they were much more likely to offer multi-year policies during the hard market era of 2000-01.
Horizontal ruler
Horizontal Ruler

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Canadian Underwriter has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *



* mandatory fields