March 18th, 2010

Group Life and Accidental Death & Dismemberment Update

Posted at 4:00 PM ET

Rates in this sector were very competitive on the primary side and, accordingly, cedents in this market were highly price sensitive and actively managed their reinsurance purchases. Excess of loss reinsurance renewals were generally orderly with rates in line with target loss ratios plus a reinsurer margin. Typically cedents saw excess of loss rates flat to increasing 5 percent.

For some cedents there was interest toward increased retentions, but for others there was interest in reducing retentions on the more volatile accident and dismemberment blocks. Reinsurers nevertheless appeared hungry for business and have been more flexible on terms and conditions (e.g., higher automatic limits, more favorable special termination triggers). Reinsurance capacity has been stable in this segment for some time and no changes are foreseen in the near future.

Against this trend, reinsurers were looking to cap exposures to large losses through per occurrence limits. While there were isolated programs without these restrictions, they are becoming the norm. The forms of the limitations varied, depending on the reinsurer, from per occurrence or per building limits to reduced limits for terrorism or war.

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