Guy Carpenter, the reinsurance arm of Marsh Inc. has just issued a comprehensive 64 page study of the state and prospects for the property/casualty reinsurance market in the year 2000. The report sees an industry in transition with continuing major problems, but finds that the downward pressure on rates has eased, and that renewals generally are being made at higher levels.
In a foreword to the report Guy Carpenter Chairman and CEO Salvatore D. Zaffino indicated that it, “provides a snapshot of the global property reinsurance industry at the onset of the 21st century. It focuses on major countries in Europe and North America as well as Australia, Japan, Latin America, and Southeast Asia – spanning more than 90 percent of the world catastrophe reinsurance market.”
In an interview at the recently concluded Reinsurance Rendezvous, Zaffino stated that, “There is definitely an upturn in the marketplace.” Property rates are increasing, and casualty losses, especially in the workers compensation sector have also risen. Zaffino said he expected “the upturn will last at least a couple of years.”
The industry has largely accepted the fact that 1999 was the second-worst year on record for catastrophe losses. According to data from Munich Re, cited in the report, economic losses in 1999 topped $100 billion, of which $23 billion was insured.
This has resulted in “a tightening of retrocessional capacity, precipitated in part by the withdrawal of a number of players, who experienced severe losses,” says the report.
According to the study other factors are expected to affect the reinsurance market. It states, “Nevertheless new economic growth, advancing knowledge of natural hazards, aggressive mitigation efforts, and the increased willingness of the reinsurance and capital markets to take multimillion dollar bets on natural catastrophes may soon narrow the gap between total economic losses and insured losses.” These factors will expand the “market for the providers of catastrophe reinsurance protection.”
As the study stresses, each country and region has different risks, economic considerations and insurance and reinsurance structures, that affect business conditions for insurers. It’s therefore increasingly necessary to analyze the types of risks in each market. The report considers each country and region in this respect.
A complete copy can be downloaded at the company website – http://www.guycarpenter.com.
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