Aon Benfield have estimated that insurers in Australia and New Zealand have recovered as much as $16 billion of their catastrophe losses caused by disasters during 2010 and 2011 from reinsurers. They say this shows how reinsurance has supported these insurers and the reinsurance market has remained effective as nearly two-thirds of their losses have been reinsured.
They say that the 1st July renewals were orderly in the region and while pricing was up insurers managed to find the capacity they needed. Malcolm Steingold, Chief Executive Officer, Asia Pacific for Aon Benfield said; “The insurance industry performed as intended and drew upon its significant capital resources to protect insurer balance sheets and earnings so that insurers could continue to help their customers rebuild homes and businesses. The reinsurance market has proved effective and continues to serve insurers in the region. It is clear that the negative impact on consumers and businesses from these recent losses has been lessened because of the role reinsurers played in assuming losses from the region’s insurers.”
Despite this, the press in Australia and New Zealand continues to report issues with acquiring re/insurance coverage for some government departments, the most recent being Queenslands roads which are largely uninsured now leaving the taxpayer liable.
Having seen the value that reinsurance can provide perhaps this would make these government entities in Australia and New Zealand more open to risk transfer instruments such as catastrophe bonds?