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Daily Insurance Industry News
Thursday 20th of September 2018
January 5, 2009

Catastrophes and credit drive reinsurance prices up

by Richard Kilner

Story link: Catastrophes and credit drive reinsurance prices up

The credit crunch and catastrophe losses have forced the price of reinsurance upwards, according to Guy Carpenter.

Chris Klein, the firm’s Business Intelligence chief, has stated that the increase in costs has been tempered somewhat by sound capital bases (a position backed up by a recent Willis Re report), but added that the marketplace remained highly volatile.

An active storm season and the continuing tightness of credit markets mean that although the reinsurance industry is generally in a good capital position it nevertheless needs to be prudent in 2009.

Property catastrophe rates are up 8%, with casualty reinsurance pricing up 5%.

However, the rise in catastrophe rates are less than that seen in the aftermath of recent crises, such as Hurricane Katrina in 2005.

Klein believes that the edge of rises has been blunted by good risk and capital management by the sector.

Willis Re has also reported a rise in reinsurance costs, by as much as 40% for some credit insurers.

The rise in reinsurance costs also follows reports from Guy Carpenter and Munich Re that 2008 saw an especially bad year for natural disasters which also made it one of the costliest on record, driving up insured losses.

 

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