Reinsurance rates on line for Swiss CAT programs were 5 to 10 percent lower year over year. Per risk high-risk excess programs also sustained price decreases of 5 percent to 10 percent.
Last year, the non-life insurance market grew only 0.7 percent. This growth is attributable to the stable private and small and medium enterprise sector, while rates for industrial risks reduced by 5 to 10 percent. Marine and business interruption were most affected by recent economic trends. There were no major changes to industry loss ratios, which remain at low levels.
In 2011, significant changes are not expected, as the market is saturated. Intensified competition will put further pressure on rates.
Catastrophe losses were small in 2010 and insufficient to attach reinsurance programs meaningfully. Subject base exposure remained flat year over year, though cedents believed pricing for property-catastrophe reinsurance was excessive over past years providing them with the opportunity to ask for reductions during this year’s renewal. Per risk exposures were flat, but pricing remained under pressure, given the absence of catastrophe claims for the past few years.
The Swiss Solvency Test (SST) became mandatory for all Swiss companies on January 1, 2011, even though the supervisory authority may have insufficient resources to verify insurers’ internal models before implementation. There is no requirement to publish new solvency figures, but we expect them to be shown in cases where the outcome is favorable to the carrier.
Capacity was ample at the most recent renewal, and most programs were oversubscribed, as was the case a year ago. Reinsurance capital increasingly came from Switzerland, as carriers moved it to regions with the best terms.