July 24th, 2013

PA/MGA Survey: Reinsurance Purchasing

Posted at 1:00 AM ET

Reinsurance continues to play an important role for program issuing carriers. Seventy-six percent of respondents to the survey this year (66 percent last year) indicated the use of both direct reinsurers and intermediaries, while 18 percent indicated their use of intermediaries exclusively.

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Structural preferences regarding reinsurance have shifted somewhat. This year, 63 percent of respondents preferred excess of loss reinsurance structures versus 69 percent last year and 37 percent preferred quota share versus 41 percent last year.

Tighter financial conditions appear to have had an impact on the carriers’ willingness to compensate reinsurance intermediaries when program-specific reinsurance is not purchased. Last year, 89 percent of the respondents indicated they would compensate intermediaries either directly, via a finder’s fee or by increasing the PA/MGA’s compensation, allowing them to pay the intermediary. This year, 82 percent of the respondents indicated they take this approach.

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