Reinsurance renewals see “targeted” underwriting approach on mid-year renewals
July 3, 2012 by Canadian Underwriter
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Reinsurers are using a highly “segmented approach” to pricing and underwriting renewal business for June 1 and July 1 renewals, Willis Re notes in a recent release of its 1st View report Looks Can be Deceiving.
The reinsurance arm of the international broker states that modest loss activity over the last 12 months in North American and international markets has resulted in “reasonable rate increases,” while “some buyers with loss-free programs, even in areas of peak exposures, have managed to obtain risk-adjusted rate reductions.”
Willis Re notes that the “targeted” approach has been “welcomed by cedents. They have seen their efforts to manage, analyze and, in some cases, de-risk their portfolio(s) rewarded in differential pricing. This approach does not support a generalized market hardening to the frustration of some reinsurers.”
Another development of interest is a “marked increase in the flow of capital into non-traditional vehicles,” such as catastrophe bonds and sidecars, Willis Re adds.
“While the influx of capital is clearly welcomed by buyers and has helped stabilize rate increases, underlying concerns remain over the durability of highly fungible capital,” the report notes. “Much of it is untested and conditioned by investor reaction to a major catastrophe event(s). Potential volatility is heightened by single-source investors versus funds or sidecars comprised of multiple investors.”
The Willis Re study can be accessed here:
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