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.
Regulatory issues are driving M&A activity in the Benelux region. In some cases, companies are being sold because of a European Union (EU) obligation to divest assets following the financial crisis. In the Netherlands, a number of smaller insurers have been acquired by larger companies, often mutual insurers (with more considering it), because of the approach of the Solvency II regime. Solvency II Pillars Two and Three are the most relevant ones for Dutch M&A. Continued M&A activity is expected, and the synchronization of catastrophe model results and the Solvency II Quantitative Impact Study (QIS) 5 scenario outputs will be a topic of discussion throughout 2012. Premium is expected to begin to increase for larger risks.
Due to a benign catastrophe year, reinsurance rates in the Benelux region remained flat or increased slightly on a risk djusted basis (0 to 5 percent) for property catastrophe programs. A slight increase in capacity, which was sufficient to meet demand, helped keep pricing down.
The treaty exposure is increasing slightly because most property policies are linked to consumer or building indices but limited because of weak economic growth.
Market capacity was similar year over year with some reinsurers increasing capacity slightly. Bermudian and London markets generally sought larger increases than Continental European markets.
For the catastrophe excess of loss programs, the region is still using RMS v9, which is something of a trend in Continental Europe. Even the reinsurers using RMS v11 are adapting the business they write to price consistently with RMS v9.
For both low and top layers per risk excess of loss programs (all lines), prices decreased slightly when loss-free, while loss-affected programs saw moderate increases. Capacity entered the market and brought pricing down as reinsurers were eager to gain market share.
There were few changes in the proportional treaty market, which maintained the status quo on risk retention and cession. In the property sector, the commissions were higher for programs with better-than-average years and moderately lower for those below average.