Rate increases in the North American and international reinsurance markets are due to modest losses and poor results – not a hardening market, according to a report from Willis Re.
The mid-year renewals report, “Looks Can be Deceiving,” concluded that “despite headline figures forecasting rate increases, there is plentiful capacity in the market. The targeted underwriting approach taken by most reinsurers to manage, analyze and, in some cases, de-risk their portfolios, has been rewarded with differential pricing.”
This approach “has been welcomed by cedents, but does not support a generalized market hardening,” Willis Re added.
Willis Re Chairman Peter Hearn said that in fact some buyers with loss-free programs, even in areas of peak exposure, have managed to obtain risk-adjusted rate reductions at the June 1 and July 1 renewals.
Other findings in the report:
- A marked increase in the flow of capital into non-traditional vehicles. • The growing sophistication of the catastrophe bond and insurance-linked securities sector means they will increasingly compete with traditional reinsurance.
- In the U.S. healthcare market, reinsurance market conditions for medical professional liability business remain favorable with pricing flat to falling, reflective of moderated loss trends and stable underlying rates. Reinsurance markets in general, however, are receptive to supporting required limit capacity.