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Daily Insurance Industry News
Saturday 20th of January 2018
March 31, 2011

Reinsuers exhaust 2011 catastrophe budgets

by Gill Montia

Story link: Reinsuers exhaust 2011 catastrophe budgets

A new report from Willis Re suggests that many reinsurers are facing an immediate challenge because losses suffered to date in 2011 have “largely exhausted” their catastrophe loss budgets for the year.

The firm states: “In response, reinsurers are trying to proactively manage their underwriting results for the remainder of 2011 by applying rate increases in areas of natural catastrophe loss activity and tightly controlling their capacity deployment.”

However, according to Willis Re, the 1st April Japanese reinsurance renewals indicate that the Tohoku Earthquake is not the catalyst that will bring about a hard market, although 2011 could see a market-wide turn if reinsurers are tested again during the year.

The “tests” named in the “Shaken and Stirring” report include: major natural catastrophe loss, inflation, the reversal of back-year reserve releases, or wider financial issues impacting investment income and balance sheet strength.

Commenting on the findings, Willis Re chairman, Peter Hearn, says: “While the financial strength of the reinsurance industry remains remarkably intact in the wake of Tohoku, it can only withstand so many blows.”

He adds: “The reinsurance industry is on the cusp of change and a hard market may be only one more major event away.”

 

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