January 31st, 2011

2011 Reinsurance Renewal Rates: Global Life Accident & Health

Posted at 1:00 AM ET

141x141jan1thumb45Global Reinsurance rates for global life, accident and health (LA&H) cover fell 5 percent year over year for loss-free programs. The US, London and broad international market followed this pattern, while China was flat at the January 1, 2011 reinsurance renewal. Per risk rates were flat from last year to this year.

Concerns about a recession-driven rise in fraudulent claims did not materialize, and reinsurers’ capacity increased. The outcome was a blended rate change of down 5 percent, with catastrophe nuclear, biological and chemical (NBC) down 10 percent and generic group personal accident (PA) flat in the primary market. Loss ratios remained stable, and the outlook for primary insurers in 2011 echoes this sentiment.

Losses were insufficient to change the global LA&H market in 2010. Subject base exposure was flat to up 5 percent, led by the economic recovery in the US and developing countries. Subject base exposure was up 20 percent in China, for example, as the economy continues to mature. Solvency II has led to several inquiries about abnormal mortality stop loss covers.

There was ample capacity for 2011, with USD350 million available for US and international risks - an increase of approximately 10 percent year over year. Some new entrants were notable, and no major players left the global LA&H space. London excess of loss capacity was USD50 million, up 20 percent year over year, and London Direct and FacD&F (Direct & Facultative) grew from USD50 million in capacity to USD60 million year over year. Reinsurers are now tending to write their maximums.

On the cedent side, some companies sought cost efficiency by combining PA and life purchases. Industry loss warranty (ILW) interest is also increasing.

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