Reinsurance rates were flat to up slightly at the January 1, 2012, renewal in Latin America and the Caribbean. Protection and indemnity rates were up 5 percent across the board, along with Caribbean property. Latin American property treaty and facultative (not including the Caribbean) were flat to up 5 percent, and marine facultative ranged from flat to up 30 percent based on loss experience.
Archive for January, 2012
Regulatory changes feature profoundly in the reinsurance market in Argentina. As of September 2011, all reinsurance, effectively, must be ceded to “local” reinsurers. As a result, all treaties and most facultative covers with inception dates between September 2011 and December 2011 were canceled and rewritten to expire on June 30, 2011. Terms and conditions were maintained in this process and adjusted upward when there were adverse results.
With no major natural catastrophes occurring in Austria since July 2009, reinsurance rates for catastrophe excess of loss programs were generally flat to down 5 percent, with one case being down significantly more, at the January 1, 2012, renewal. In the primary market, rates were generally higher - even by as much as 20 percent for storm business. We expect original rates to flatten overall in 2012 and further decline in the motor business specifically due to continuing competition in that sector.
Primary insurance premium rates increased in the Benelux private sector between 2 percent and 5 percent, though the reasons differed for the various classes of business and territories. In Belgium residential property, for example, minor winter and summer storms in 2010 and 2011 as well as some small floods, led to unsatisfactory results. In the Netherlands, Belgium and Luxemburg motor insurers had to cope with unsatisfactory results because of increased losses.
January 2012 Reinsurance Renewal: United Kingdom: Reinsurance rates were generally flat at the January 1, 2012, renewal for the UK property market. While there were no local events causing reinsurance treaty losses, the effects of global catastrophes and local retention losses, such as freeze and riot, did have an impact.
Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.
Guy Carpenter’s January 2012, Reinsurance Renewal Report: Executive Summary: The (re)insurance sector experienced historic catastrophe losses in 2011, many in areas not previously considered ‘peak’ risks. Devastating earthquakes in Japan and New Zealand, floods in Thailand and Australia and a record-breaking tornado season in the United States contributed to insured losses in excess of USD100 billion. As carriers continue to penetrate new growth regions, ‘cold spot’ losses are expected to increase.
Renewals Reveal Shift in Industry Behavior: The January 1, 2012, renewals saw a shift in industry behavior as both insurers and reinsurers implemented more sophisticated, customized approaches to risk assessment and mitigation, according to Guy Carpenter. In its 2012 global reinsurance outlook, Catastrophes, Cold Spots and Capital: Navigating for Success in a Transitioning Market, Guy Carpenter reported that reinsurers were in a position to undertake a major review of pricing and underwriting going into the renewal season. This led to significant market fragmentation and increased market volatility at January 1.
Guy Carpenter: January 2012 Reinsurance Renewal - Property Overview: The events of 2011 had a significant impact on property renewals at January 1, 2012. The approach to the property market, particularly property catastrophe business, has evolved significantly since Hurricane Andrew with the gradual incorporation of technical and model-based underwriting. There is evidence at this renewal that another subtle shift has taken place.
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In contrast to 2010, there were no meaningful natural catastrophe losses for 2011 in Central and Eastern Europe (CEE); and, therefore, they did not impact pricing. Catastrophe excess of loss rates on line in the region were flat to down 5 percent for loss-free programs at the January 1, 2012, renewal on an exposure-adjusted basis. Primary insurance rates/premiums fell slightly due to competition and the current economic climate. Pricing is expected to remain flat in 2012.
Reinsurance rates in general were flat in Scandinavia at the January 1, 2012, reinsurance renewal with the exception of catastrophe rates, which increased modestly for loss-free programs and significantly for loss-affected programs. A reduction in capacity for catastrophe business contributed to pricing in the region, whereas the capacity for non-catastrophe business was plentiful. Reinsurance structures were generally unchanged year over year.
Reinsurance rates generally were flat year over year at the January 1, 2012, renewal. Motor was the lone exception, with reinsurance rates up 5 percent from a year ago. For 2012 the outlook is relatively stable. Developments in the motor business, which accounts for 50 percent of property and casualty premiums, also have led to a broader improvement in the insurance industry throughout the country.