Aon Benfield, the global reinsurance intermediary and capital advisor of Aon Corp, has issued a bulletin indicating that Australian and New Zealand insurers, who were hit with “catastrophic events” in 2010 and 2011, had “nearly two-thirds of the losses reinsured.”
Aon Benfield’s Asia Pacific CEO Malcolm Steingold, speaking at the 12th Biennial Aon Benfield Hazards Conference in Australia, used the figure to highlight the value of reinsurance protection for insurers.
He also explained how, despite the losses, capacity from global reinsurers remains strong for business in the Australia and New Zealand region.
“Insured loss estimates from Impact Forecasting, Aon Benfield’s wholly owned catastrophe modeling firm, reveal that insurers faced a combined loss of A$25.6 billion [US$25.21 billion] from the Queensland floods, Cyclone Yasi, the Perth hailstorm and the New Zealand earthquakes,” said the bulletin. “In turn, excellent risk and capital management decisions have allowed insurers to recoup an estimated $16 billion from reinsurers.”
Aon Benfield added that “following significant catastrophe loss activity over the past 12 to 18 months, the renewal of reinsurance programs at 1 July 2011 was orderly. While pricing in the region was higher at renewal, insurers continued to find the capacity they required at terms and conditions that remained lower than their cost of capital and accretive to earnings.”
Steingold noted: ‘The insurance industry performed as intended and drew upon its significant capital resources to protect insurer balance sheets and earnings so that insurers could continue to help their customers rebuild homes and businesses. The reinsurance market has proved effective and continues to serve insurers in the region. It is clear that the negative impact on consumers and businesses from these recent losses has been lessened because of the role reinsurers played in assuming losses from the region’s insurers.”
Source: Aon Benfield
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