Global Reinsurance Review January 2009

Reinsurance rate increases were moderate on average at the January 1, 2009 renewal. The Guy Carpenter World Rate on Line (ROL) Index rose 8 percent, in response to the dual pressures of a financial catastrophe and the second most expensive property catastrophe year on record. The degree to which prices increased was tempered by large capital positions at the beginning of 2008, enabling carriers to absorb the year’s losses, but this is where the generalizations end. Loss history, geography, and line of business led to wide differences in pricing. Expectations of another above-average storm year and the uncertainty surrounding the credit crisis underscore the need for continued capital management discipline in the coming year.

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Check out the following articles, which were published today:

Reinsurer Diversification: The Guy Carpenter Model >>

Chart: Shareholders’ Equity Changes at Nine Months >>

Solution Spotlight: i-aXs®: Life, Accident and Health >>

The i-aXs® data management platform has revolutionized risk portfolio management. Guy Carpenter’s award-winning platform gives risk-bearers the power to convert life, accident and health (LA&H) data quickly into clear, concise information that fuels faster, better-informed decision-making. The i-aXs platform contemplates the complex data needs and perils specific to this line of business while providing a combined assessment of property and casualty exposures.

i-aXs products such as Risk Profiler^iX, Accumulator^iX, and RealCat^iX, hep carriers manage their LA&H exposures with a simple way to dig deeper into their own data.

Learn more about i-aXs >>

Contact the LA&H Specialty practice >>

Carrier Capital Softens the Financial Blow: the market is experiencing a fundamental tension of factors right now.

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Cat Risk Comes Out of Hiding: advances in casualty catastrophe modeling may help protect you from “hidden” portfolio exposures.

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Uncover and Mitigate Product Liability Risk: avert a Casualty Catastrophe: few grasp the full extent of product liability insurance exposure.

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ERM: Part of the Answer to Financial Catastrophes: while hurricanes spun through the Gulf of Mexico last month, a larger catastrophe ripped through New York, London, Shanghai, and every other major financial center in the world.

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Models Rise to Flooding Challenge: most models have not been able to address the complexity of this peril, rendering targeted risk management impossible.

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Most Popular Keyword: casualty cat (i.e., casualty catastrophe)

And, you may have missed …

Multi-Year Cover Gaining Steam in LA&H: the use of multi-year cover for accident and health lines of business, though in its infancy, could be the next step in mitigating risk and reducing ambiguity.

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David Rains, Managing Director
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Carriers thrive on predictability. Risk management techniques, models, and sometimes intricate programs are devised to anticipate insured losses and take the appropriate risk transfer measures. The use of multi-year cover for accident and health lines of business, though in its infancy, could be the next step in mitigating risk and reducing ambiguity. With a longer-term commitment, (re)insurers trade price advantages that come from sharp turns in the market for the predictability that both crave, particularly when the market becomes volatile.

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David Rains, Managing Director
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Life, Accident and Health cedent behavior was relatively unchanged at July 1, 2008 renewals. Prices have continued to come down, thanks to several consecutive benign loss years. Rates are beginning to stabilize for some product lines, including medical stop-loss and long-term disability, though the underlying reasons varied with the types of coverage sought. Insurers also are starting to investigate multi-year coverage to protect against volatility and maintain coverage in the event of market discontinuity, and reinsurers have begun to respond.

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Within the Personal Accident (PA) catastrophe space, the preponderance of cover included full nuclear, biological, and chemical (NBC) terror protection, particularly for insurers with U.S. exposures. NBC prices have declined, especially at lower layers, while XNBC prices are virtually unchanged – effectively reducing the surcharge for complete coverage.

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