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.
Direct premium was up 2 percent to 3 percent from last year, but exposures increased 10 percent for the same time period. This was driven primarily by the selling of larger catastrophe limits without a commensurate increase in price. The result has been an increase in the divergence between Italy’s primary and reinsurance markets.
Loss-free programs were flat year over year on a risk-adjusted basis for catastrophe excess of loss programs, largely because of a benign catastrophe year. There were various floods, but so far, nothing above retentions has been reported. Retentions continue to increase as cedents seek to maintain or, in some cases, reduce their reinsurance spend. The market has had sufficient reinsurance capacity, but price was an issue at times.
For per risk excess of loss, working layer programs were flat relative to last year’s renewal, as were high risk excess programs.
For proportional treaties, retentions tended to remain stable where the year’s results were satisfactory and terms were not changed. As terms became less favorable to cedents, retentions rose. Ceding commissions varied substantially at the January 1, 2012, renewal and were based on class and results. Capacity was relatively stable, with some reinsurers reducing while others increased.