As rates remain low and cedants have increased retentions, reinsurers are looking to new markets in order to grow. James Votta, principal, Insurance and Actuarial Advisory Services at EY gives an overview of the reinsurance market and explains why certain lines are experiencing higher volumes of interest.
Diversification is nothing new for reinsurers, but as rates refuse to rise, reinsurers are looking to new lines for growth.
“As property reinsurance rates have fallen, there is certainly the desire to substitute higher margin business,” says James Votta, principal, Insurance and Actuarial Advisory Services at EY, who explains that in order to achieve a successfully diversified portfolio, reinsurers must use their own underwriting, accumulation and retro strategies.
He continues: “Certain industry segments, such as insurance-linked securities (ILS) and hedge fund backed property reinsurers, have seen tremendous growth and taken significant market share of the property catastrophe market. This segment may be reaching maximum catastrophe exposure and has looked to diversify in order to continue to grow.”
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James Votta, Insurance and Actuarial Advisory Services, EY, diversification, ILS