Guy Carpenter & Company today released a briefing and analysis of the Kumamoto Earthquake that struck Japan in April 2016.
As we approach the April 1 Japan reinsurance renewals, we review recent GC Capital Ideas stories focusing on Asia Pacific.
Edward Fenton, Managing Director
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As in every past year, Japanese (re)insurers look to the January 1, 2013, reinsurance renewal for guidance as to the likely state of the market for their renewals at April 1. This year they will have been encouraged with a market characterized by excess capital, overcapacity and easing prices for loss-free business. This scenario is evidenced by the Guy Carpenter Global Property Catastrophe Reinsurance Rate on Line index, which fell at renewal, albeit marginally. This environment will come as a welcome change to Japanese buyers, who have fought their way through the last two renewals against adverse market conditions caused by a series of significant losses in the Asia Pacific region.
Reinsurance rates rose as the market continues to work through the impact of the events of 2011, according to Guy Carpenter. In a briefing released today, Guy Carpenter reports that this year’s April 1 renewals are continuing the general trends observed at January 1, 2012.
Edward Fenton, Managing Director and James Nash, CEO - Asia Pacific
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Earthquake Lines
The Japanese market buys considerable amounts of earthquake reinsurance - both pro rata and excess of loss. Companies were able to renew unchanged capacity for pro rata treaties at the April 1, 2011 renewal, despite the occurrence of the Tohoku earthquake at a time when the renewal process was only partially completed. Typical ceding commissions for this kind of business have ranged between the low and high teens over the past few years. In most but not every case, these commissions were reduced by up to 3 percent in order to achieve placement goals. Many reinsurers also looked for greater detail on primary underwriting practices.
