Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Alternative capital not the main source of re/insurance competition: Survey


Competition in insurance and reinsurance has been on the rise. In the reinsurance market in particular, aggressive competition has been cited at recent reinsurance renewals, as players seek to put capacity to work and new capital keeps entering in the form of ILS.

The growing pool of alternative capital, invested in collateralized reinsurance, catastrophe bonds and other insurance-linked securities (ILS) structures, is often cited as a reason for the higher competition in the market, but actually it seems existing players may be more aggressive in their actions according to the results of a recent survey.

Rating agency A.M. Best undertook a survey of the insurance and reinsurance sector, receiving 400 responses on topics around capital management, competition and asset allocation. One of the questions involved competition and where it is seen to come from, with perhaps surprising results.

More than two-thirds of the survey respondents said that competition within their industry is increasing. They were asked whether they are seeing more competition from new entrants or from incumbent players in the sector and the property and casualty respondents interesting feel its the existing players that are being more aggressive.

Are Respondents Seeing More, Less or the Same Amount of Competition?

Are Respondents Seeing More, Less or the Same Amount of Competition?

So P&C sector insurers and reinsurers overwhelmingly feel that incumbent and existing market participants are causing competition to increase due to their more aggressive actions.

There has been a lot of discussion about where the aggressive actions have been taken to win business, actions that might include slashing of rates, offering broader terms and conditions or bundling other covers into a renewal.

From the survey results it looks like these actions are largely coming from existing market players, which is aligned with commentary we’ve provided after recent renewals where it has been widely reported that incumbents have used terms and conditions in order to remain relevant with their clients.

Also of interest from the survey, A.M. Best says that 16% of all respondents said that they were more concerned about non-traditional companies offering their products, than traditional competitors. A.M. Best felt that this was a low figure given the focus on non-traditional companies, capital and business models, which includes alternative capital, technology players and retailers that are all eating into dedicated re/insurer territory now.

Specifically on alternative reinsurance capital, A.M. Best notes that it is the reinsurers that are most aware of this trend, the primary insurers remain less aware of how new capital and ILS is changing the market landscape.

A.M. Best says that reinsurers displayed mixed feelings about whether the growth of alternative capital provides benefits or is a detriment to the industry.

We’ve long been writing that it seems that the really aggressive moves on pricing and terms and conditions have been coming from a number of traditional players in the reinsurance market, rather than from ILS players and alternative capital.

The survey results perhaps provide some backing to this theory. Clearly P&C insurance and reinsurance players are more concerned about the aggressive moves made to win business by traditional companies, rather than from new entrants or alternative capital players.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.