Cedants: how much coverage to buy?
A lot of insurers have been forced to reevaluate how much reinsurance they’re buying in the aftermath of the losses from hurricanes Harvey, Irma and Maria (HIM), Mike Schnur, partner at TigerRisk, told PCI Today.
“Many companies have increased their net retentions in recent years. Now, after the multitude of events, there have been conversations about reducing net retentions. That’s clearly an issue for some people, so we are evaluating that,” he said.
Schnur said that for the most part losses from the storms will be well contained within most people’s programmes. But they have prompted people to consider where it makes sense to increase risk and whether to use other people’s capital, via sidecars or other risk transfer techniques, or to use their own capital.
He stressed that it remains very early days to get a full handle on the scale of the losses and what they might mean for rates.
“We’re obviously very engaged in the market, as property/cat is a big part of what we do. We are spending a lot of time with clients helping them to understand their losses, but it’s a little early right now in terms of where we think things are going.”
Schnur added that he thinks rates have at last bottomed out in some other areas of the market after years of softening—the bottom of the market has now been reached in casualty, for instance. He also believes primary rates have reached their low point on both the property and the casualty sides.
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