Reinsurance pricing firms up at Apr.1, 2009 renewals: Aon Benfield

Pricing in the global property catastrophe reinsurance market generally continues to firm, according to Aon Benfield’s Apr. 1, 2009 update to its Reinsurance Market Outlook report.
“In the regions where reinsurers have higher accumulations — such as Japan, Europe and the U.S. — naturally, rates have increased more significantly than outside of peak zones and accumulations,” Aon Benfield’s CEO says.
“Having said that, local dynamics were still a factor at April 1, and sometimes helped to buck any general regional pricing trend.”
Catastrophe risks dominated the renewals period in Japan. A strong yen, which strengthened over major reinsurance market currencies, is partly responsible for pressure on capacity for Japanese programs and consequent rate rises of between 5% and 10%.
In the United States, catastrophe risks did not feature heavily at Apr. 1, Aon Benfield notes.
“The current Florida legislative session is being watched carefully by all exposed insurers to determine how that state will address the estimated [US]$18.5 billion shortfall in its projected loss reimbursement commitments from the state controlled hurricane catastrophe fund,” Aon Benfield notes. “The illiquidity in the municipal bond market has created the potential financing shortfall and this capacity is critical to many insurers.”
Aon’s report notes that in Europe, catastrophe renewal prices tended to be firmer (on the order of about 5%). “Small programs were easily placed, but flood risk remains a concern for reinsurers for bottom layers of catastrophe programs,” Aon Benfield notes.