The California Earthquake Authority Governing Board today approved a team of reinsurance intermediaries to work on the CEA’s behalf to meet its reinsurance needs. AON Benfield will act as lead intermediary, with Guy Carpenter & Co. LLC and Willis Re Inc. as associate intermediaries, to form a team that will access reinsurance capacity, analyze global reinsurance markets, assess creditworthiness of potential reinsurers, determine and negotiate the lowest possible price for the CEA’s reinsurance cover, and assist the CEA staff and Board in meeting generally all the CEA’s reinsurance needs. The team will act as brokers under a five-year contract.
“The CEA considers AON Benfield, Guy Carpenter and Willis Re to be the three top reinsurance intermediaries in the world,” said CEA Chief Executive Officer Glenn Pomeroy. “This new team positions the CEA to access the broadest worldwide reinsurance capacity, evaluate the financial soundness of potential reinsurance markets and enable us to safely place the CEA’s reinsurance program at the most competitive rates in a cost-effective manner.”
The CEA Governing Board made the selection at its meeting today following an open, competitive bidding process. It said it sought intermediary firms that could reliably and safely place the reinsurance program at the most competitive terms. The CEA released its request for qualifications on May 1 and published it on the CEA’s Web site.
The CEA, historically, has purchased reinsurance from the global reinsurance marketplace as one method to transfer risk to third parties. The CEA currently purchases more than $3 billion in catastrophe reinsurance.
The CEA, through private insurers, provides earthquake insurance throughout California to owners and renters of condominiums, apartments, mobilehomes and single-family houses. The CEA, which began operating in 1996, has approximately 770,000 policies in force, representing about 70 percent of residential earthquake insurance policies in California.
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