September 10, 2009 by Canadian Underwriter
Global reinsurance rates are increasing by an average of 8% through the 2009 reinsurance renewals, according to Guy Carpenter & Company’s annual survey of the global property catastrophe reinsurance market.
Rates declined by 6% in 2008, having declined by 10% in 2007.
The 8% rate increase in 2009 was largely a result of the financial crisis and its negative impact on reinsurers’ balance sheets, exacerbated by Hurricanes Ike and Gustav, World Catastrophe Reinsurance Market 2009 finds.
Barring any major catastrophe or financial setback, little movement in reinsurance rates is expected at the Jan. 1, 2010 renewal, the study finds.
“Combined insured losses of US$13.9 billion from Hurricanes Gustav and Ike, along with the global financial crisis, significantly impacted reinsurer balance sheets,” according to a release.
Increases in the United States were between 10% and 15%, while Europe was up 7% and Asia at 2%, the release notes.
“The financial crisis profoundly affected the reinsurance industry, though we are seeing some improvement in earnings as the financial markets stabilize,” said Peter Zaffino, president and CEO of Guy Carpenter. “In this challenging environment, organizations that take a disciplined approach to risk and capital management will be well positioned to thrive.”