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Nick Frankland, Chief Executive Officer, EMEA and Franck Pinette, Chief Executive Officer, European Life Business,
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Life and non-life reinsurance are different. One of the major differences is the prominence of the role of the reinsurance broker in non-life reinsurance - more than 75 percent of non-life business is transacted through brokers. This compares with only 5 percent transacted in life reinsurance. Why is there such a pronounced difference? And why is the life market developing a need for more frequent use of brokers?

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David Rains, Managing Director
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Medical

While most renewal activity in this segment occurs at January 1, subsequent placements confirm that a highly competitive market exists for medical reinsurance. Capacity was rational but ample, with incumbents often renewing aggressively to avoid losing the business. Beyond competitive pricing, reinsurers looked to add greater value through their claims expertise or specialty network access.

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Reinsurance renewals took place against a backdrop of plentiful capacity at July 1, 2012. Capital has continued to strengthen through the second quarter of 2012, moderating pricing pressures, according to a briefing released today by Guy Carpenter & Company.

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Slower growth in primary medical insurance rates had implications through the reinsurance sector at the January 1, 2012, renewal. Loss-free life and accident catastrophe programs sustained risk-adjusted price decreases of 5 percent to 8 percent on average, and rates for medical per member excess of loss working layer programs were down around 5 percent.

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Directors & Officers

D&O reinsurance rates were flat slightly at the January 1, 2012, renewal, despite small rate increases on some primary and lower excess insurance layers in recent months. Pricing was more competitive on higher excess insurance layers and is down approximately 10 percent year over year. For 2012 modest price increases in primary and first excess insurance layers are likely, especially in light of rate changes over the past few months. Rate decreases on excess insurance layers will be smaller, resulting in a net flattening. Small and medium-sized businesses are likely to follow the same trajectory.

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David Lewin, Managing Director
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The scandal surrounding the Mediator® diabetes drug (benfluorex hydrochloride) was revealed by Dr. Irene Frachon in June 2010 in her book, whose title could not be more explicit - “Mediator 150 mg - How Many Deaths?” This title triggered the first of many legal battles with Servier Laboratories, the manufacturer of the Mediator drug. While Servier won the first round, when judges ordered that “How Many Deaths?” be deleted from the book’s title, the Court of Appeal of Rennes later allowed the subtitle, emphasizing that the book was contributing to a legitimate debate regarding the Mediator case.

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Medical

Medical insurance reform remains the strongest driver is this space, with insurers still grappling with concerns around unlimited lifetime maximums and minimum loss ratios. Reinsurers have responded by offering unlimited lifetime excess of loss coverages that have proved popular with some insurers. Pricing for these very high layers, such as unlimited excess of USD10 million per person, is capacity and market-based, as the layers are so far out-of-the money that there is no credible experience. Further, in the short term, many insurers will maintain annual maximums where possible, which will limit observable experience at the highest amounts. Claims and rate-making for the very high reinsurance coverages will be interesting to watch over the next couple of years as the different elements in the healthcare delivery value chain adapt to the new incentives in health care reform.

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Per risk medical reinsurance rates for working layers sustained a wide range of increases, based on actual experience of the underlying business. Average increases ranged from 12 percent to 15 percent, but with considerable outliers.

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