March 15th, 2010

1/1 Renewal: Personal Accident

Posted at 3:00 PM ET

On the primary side, the personal accident market continued to attract new entrants globally. Despite material personal accident losses from the Colgan Air and Air France air crashes, direct rates continued to see downward pressure along with demands for larger limits. Reinsurance capacity in the personal accident segment continued to grow as a function of the new entrants in the Life/PA catastrophe space. New markets willing to write catastrophe risk were also willing to entertain per person risk.

Per person excess of loss rates were under considerable upward pressure from multiple factors. First, aviation losses contributed to higher than expected losses. Second, limits exposed continued to increase faster than the quality of exposure data. Finally, the industry is experiencing a general increase in claims frequency that cannot be attributed to any single, discrete factor. At January 1, rates were typically up 5 percent to 20 percent.

Reinsurers reacted most strongly to companies that had experienced both increased frequency and severity. Equally, companies providing the best data on exposed limits generally saw the most benign rate increases. Cedents generally maintained retentions, but with some movement toward higher retentions for those with the greatest rate increase on expiring structures. In some instances, cedents put pressure on occurrence and aggregate limits.

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