Clients seeking further cuts a concern

Although there may be signs of rates stabilising in the aftermath of the recent big losses in North America, rate decreases may not be over in the Asian reinsurance markets, according to respondents to an online survey by Intelligent Insurer ahead of the 14th Singapore International Reinsurance Conference.

The survey asked readers what their biggest challenge or concern was this renewals season. It seems reinsurers in the region may not be enjoying a change in fortunes as in other parts of the world. A majority 43.7 percent of respondents cited soft market conditions and rate cuts as their primary concerns.

“Softer pricing and pressure on margins will continue be a burden for many players active in this space,” said one respondent. “The question is, when do we say enough is enough?”

Another respondent added: “Risk is too concentrated in Asia-Pacific and there has been a dearth of big cat losses to push pricing.”

A further 30 percent of respondents said that consolidation and the resultant changes to the reinsurance landscape was their biggest concern.

One reader said: “Margin pressures and fear of insolvency is driving a lot of M&A.”

Some 16.1 percent of respondents were concerned that cedants are restructuring their programmes and buying less coverage.

Finally, 10.2 percent of respondent suggested the influx of alternative capacity and way this is changing the industry was the biggest concern or challenge.

A respondent commented: “ILS is not as active in Asia, with few notable exceptions. I do not think it is comparable to the traditional market.”

A couple of respondents stressed that while market conditions are tough and there is a lot of competition, there are still attractive growth opportunities and the region is ripe with innovation, especially in terms of digitisation.

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