Interest in casualty clash reinsurance coverage re-sparked

Casualty clash reinsurance rates remained relatively flat at the Jan. 1, 2009 renewals, but many large carriers are showing a renewed interest in the product, Guy Carpenter reports.
Casualty clash cover is an excess contract that protects an insurer from losses related to a specific event that would affect several insureds or lines of businesses, Guy Carp says in its briefing, GC Capital Ideas.
Casualty clash cover is not triggered in the event of a single peril, unless that same peril happens in tandem with one or more other types of catastrophes, in which instance the reinsurance policy coverage would be triggered.
A typical market cover clash will have capacity of up to US$100 million, although it is possible that sources of capital can offer much more.
Seventy per cent of programs either renewed at expiring terms or secured rate decreases relative to 2008, Guy Carp notes. Forty-five per cent of programs were able to secure rate decreases year-over-year, with another 25% renewing at expiring terms.
Only 30% of programs sustained prince increases at the Jan. 1, 2009 renewal.
Specific layers renewed at rates of -12.3% to 17.5%, based on program-specific factors such as loss history and changes to limits and retentions.
Only 6% of renewing programs increased retentions, and 23% lowered them, the briefing says. Fifteen per cent of renewing programs moved for higher limits, while only 8% went in the opposite direction, it continues.
Many large carriers are considering larger net lines on their portfolios, and so casualty carriers are showing fresh interest in clash cover, Guy Carp says.
“Since few large carriers purchase this form of coverage, capacity was sufficient and relatively insulated from the effects of the global financial crisis,” the briefing says.
“The availability of capital was increased by the participation of property-catastrophe markets interested in diversifying into non-accumulating lines of business.”