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Asian reinsurance market shows more rate discipline than U.S. market


April 23, 2008   by Canadian Underwriter


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Property catastrophe reinsurance renewal rates decreased globally as of Apr. 1, 2008, but some areas of the world showed greater rate discipline than others, according to a report by Guy Carpenter & Company LLC.
Insurers in Asia and in the United States each pushed hard for reinsurance rate reductions, the Guy Carpenter report observed, but U.S. cedents were comparatively more successful at extracting reduced rates from their reinsurers.
The report, “The Market’s Mixed Signals: Reinsurance Renewals at April 1, 2008,” reviewed annual reinsurance market conditions at the Apr. 1 renewals period.
The briefing focuses on developments in a number of key territories, including India, Japan, the Republic of Korea and the United States, across several classes of business.
According to the briefing, rates across each line in Japan generally decreased from 5-10%. In Korea, reductions were as high as 20%.
But “while cedents pushed hard for rate reductions in Asia, reinsurers stood firm, with rates in general already close to technical levels,” the briefing says. “Most of the rate decreases witnessed in Asia were therefore in the single digits.”
In contrast, the briefing added, insurers “in the United States were more successful in achieving substantial rate reductions as competitive forces prevailed.”
Looking ahead to the June 1 and July 1 renewals periods, current trends suggest rates in the United States are likely to continue to decline, said Kevin Stokes, managing director and global head of Guy Carpenter’s property specialty practice.
“However, this assumes catastrophe losses will remain low,” Stokes said. “With forecasters expecting an above-average North Atlantic hurricane season, we could see a shift in market dynamics.”


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