Reinsurance rates down across all markets

Reinsurance rates continued to soften during 2008 renewals, according to separate reports issued by two leading global reinsurance and insurance brokers.
Reinsurance broker Guy Carpenter, in a report entitled ‘Near Misses, Plentiful Reminders: Global Reinsurance Review, January 2008,’ notes “property catastrophe reinsurance rates were down an average of 9% across all markets at Jan. 1, 2008 renewals.”
And barring large catastrophe losses in 2008, Guy Carpenter’s report predicted, “we expect to see the downward drift in rates that we have seen recently continue through 2008 and into 2009.”
Meanwhile, global insurance broker Willis Group Holdings, in a report entitled ‘Settling or Sinking?’, similarly reported “rate reductions in almost every line of business.”
Willis noted record profits and a quest for diversification has led to severe competition between reinsurers. The resultant falling rates are suggesting the reinsurance industry is “showing signs of reverting to the historic pattern of feast or famine,” according to Willis Re CEO Peter Hearn.
Both Guy Carpenter and Willis noted the 2008 renewal season represented one of “unprecedented lateness,” as Willis’s Hearn put it.
“Cedents continued to take advantage of a buyer’s market, with many 2008 renewals closing late as buyers held out for lower rates in the soft market,” Guy Carpenter observed. “As a result, reinsurers experienced lower rates and smaller lines.”