Risk transfer: restraint despite power


Risk transfer: restraint despite power

Conditions in the risk transfer world have rarely been more favourable to buyers. Yet while many are clearly leveraging their positions and seeking better deals, a surprising level of restraint exists as they also attempt to ensure their long-term traditional partners remain good business partners for the foreseeable future.

As the industry heads into the year-end renewals and negotiations around some of the biggest contracts being exchanged hit full swing, the dynamic between reinsurers and their clients is an unusual one.

Intense competition among traditional players combined with a plethora of alternative means of risk transfer available to cedants ranging from insurance-linked securities (ILS), to collateralised coverage available through sidecars, to bespoke industry-loss warranties, means the boot is firmly on the foot of buyers at the moment—they can negotiate hard and pick and choose their partners based on any basis they wish.

Indeed, perhaps, some are behaving opportunistically. Charles Goldie, deputy CEO, global non-life and head of specialty lines at PartnerRe, says two distinct types of buyer are emerging in this ultra-competitive environment: those who appreciate the long-term nature of reinsurance and buy on the basis of reliability and ability to pay claims, and those who buy purely on the basis of price, securing coverage as cheaply as possible.

risk transfer, PartnerRe, Allianz Re, AXA Global P&C, Zurich

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