While this is a bit surprising, I suspect (not hear from reliable sources) that some contracts have greater than 10% price increases, while other reinsurers’ deals have fallen below +10%.
I suspect the capital level and contract attachment point level cause the price increase disparity. Also, ERM practices of a reinsurer may call for more or less price movement in response. But I need to keep my ear to the ground for more info.
The above is somewhat simplistic as it discusses the average expected price rise. Of course, there will be increases above and below it. I’m not sure if the reported increases are on a sufficiently large sample, but I’ll assume so, even though it may not include some price changes that would pull the increases toward the ‘expectations’. IF ‘we’ miss the actual price increases relative to the expected, perhaps ‘we’ need to re-evaluate our assumptions about the impacts of ILS and Cat bonds, and method of estimation price increases, going forward? In other words, the actual weather is right, the weather reporters’ report is right, and the weather forecast is wrong. That being said, we need to rethink our approach to price increases for BOTH insurance contracts and stock prices; i.e. the actual price change is correct whereas the analyst’s forecasts of rate levels and earnings, respectively, need to be improved in the future.
While this is a bit surprising, I suspect (not hear from reliable sources) that some contracts have greater than 10% price increases, while other reinsurers’ deals have fallen below +10%.
I suspect the capital level and contract attachment point level cause the price increase disparity. Also, ERM practices of a reinsurer may call for more or less price movement in response. But I need to keep my ear to the ground for more info.
The above is somewhat simplistic as it discusses the average expected price rise. Of course, there will be increases above and below it. I’m not sure if the reported increases are on a sufficiently large sample, but I’ll assume so, even though it may not include some price changes that would pull the increases toward the ‘expectations’. IF ‘we’ miss the actual price increases relative to the expected, perhaps ‘we’ need to re-evaluate our assumptions about the impacts of ILS and Cat bonds, and method of estimation price increases, going forward? In other words, the actual weather is right, the weather reporters’ report is right, and the weather forecast is wrong. That being said, we need to rethink our approach to price increases for BOTH insurance contracts and stock prices; i.e. the actual price change is correct whereas the analyst’s forecasts of rate levels and earnings, respectively, need to be improved in the future.