Given the tough pricing environment, skittish capital markets and litany of catastrophe losses seen in 2011, it’s hard to regard the present as a golden age for reinsurers.
Nonetheless, a new report from
Underlying the good news is indicators of a hardening market in certain loss-hit regions and lines of business. “The recent spike in global catastrophe activity, along with increased conservatism in catastrophe models, appears to have changed many primary companies’ perception of risk, particularly in the United States,” the report states. “The revised cat models also have caused some reinsurers to rethink their pricing and capital requirements, which together with increased demand for capacity have applied upward pressure to catastrophe cover rates.
The report notes both primary and reinsurance companies have been harvesting favorable loss-reserve development from casualty business written in the early 2000s. This combined with the pending turn of the market may be cause for guarded optimism.
“The purpose of the (re)insurance industry is to serve as a risk management tool for its clients and to be there to pay claims. In the wake of the global catastrophes of 2011, which will be ranked among the costliest years on record, the story of the Bermuda market is one of resilience,” the report states.
