3 April 2017News

Reinsurance rate decline slows further at April 1 renewals

During the April 1 reinsurance renewals, rate reductions ranged from flat to mid-single digit reductions compared to a low double digit range seen 12 months ago, broker Willis Re said in its report titled Willis Re 1st View April 1, 2017.

Risk-adjusted rate reductions on short tail classes continued to moderate while international buyers achieved slightly larger reductions as compared to US and Lloyd’s buyers.

Overall limits purchased have not reduced, and some have increased, as more buyers seek additional protection. Retentions have remained largely stable, the report said.

Alternative investments such as insurance-linked securities (ILS) have maintained the aggressive posture and are now often prepared to price more competitively for peak zone catastrophe risk. This erosion in the margin on catastrophe business puts additional stress on traditional reinsurers.

As a result, reinsurers are trying to address pricing in non-catastrophe classes. In the US, the poor results in automobile business, both commercial and personal lines, and in excess workers’ compensation, provide examples of classes where reinsurers are seeking improved terms.

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