Reinsurance News

The global insurance and reinsurance industry remains incredibly competitive as traditional and alternative capital continues to enter the space, adding pressure to rates, suggesting that market participants must do more in order to reduce costs, and ultimately increase efficiency, according to PwC.

Provider of industry-wide catastrophe exposure, industry loss data and indices, PERILS AG, has announced its expansion outside of Europe for the first time, extending its market coverage to include a range of Australian risks.

A $100 billion catastrophe loss would not cause a significant hardening of reinsurance rates given the industry’s capacity to absorb major losses and strong appetite from the capital markets, thinks John Seo, Co-Founder and Managing Principal at cat bond and ILS specialist investment manager Fermat Capital Management LLC.

Over the next few years reinsurance giant Munich Re does not expect any significant growth in insurance or reinsurance demand, the company’s Board said today, which suggests that with the excess capital sloshing around the market pressure will not ease any time soon.

The largest insurance-linked securities (ILS) fund managers are actively raising capital at this time, which increasingly will be diverted to collateralised reinsurance as focus on that product grows, according to broker Aon Benfield.

Market conditions are slightly worse in the global reinsurance market compared to this time last year, according to Willis Re CEO John Cavanagh, however the worsening of market pricing and conditions has not materially changed in that time, providing hope that things are stabilising.

Vario Partners, the specialist risk advisor launched in late 2014 by three former PwC exec’s to connect portfolios of insurance or reinsurance risk with capital market investors through securitisation or ILS structures, has appointed industry veteran Michael Watson as a non-executive director.

Ratings agency A.M. Best expects alternative reinsurance capital to continue entering the reinsurance sector for the foreseeable future, with the majority of any additional capacity inflows after the next large event most likely to come from the capital markets.

Blockchain, or distributed ledger technology, was “made for reinsurance,” according to PwC, and could represent a cost saving opportunity of up to $10 billion as companies look to increase efficiency and understand what the development of insurtech means for their business.

The profitability of Bermuda domiciled reinsurers is under threat from the abundance of traditional and alternative reinsurance capital that continues to drive down pricing in the sector, among a series of other market challenges, according to Fitch Ratings.