RAA highlights growth opportunities at PCI
Reinsurers will seek opportunities for growth in the current market as rates potentially harden, according to Frank Nutter, president of the Reinsurance Association of America (RAA).
“The primary interest of the reinsurance community is looking for growth opportunities. This could mean working with the PCI to find ways to transfer risks from government programmes into the private sector,” Nutter told PCI Today.
He added that the National Flood Insurance Program is a good example of this potential. Other government bodies that could have similar potential to do this include the Export-Import Bank of the US, the Overseas Private Investment Corporation, and Fanny Mae and Freddie Mac, which take secondary mortgage market risk (although the latter have increasingly been transferring risk to reinsurers in recent years).
“When we look at the purpose of advocacy groups such as the RAA and the PCI, one thing we can do is help provide the industry with opportunities to underwrite risks that perhaps government has taken on and is looking for ways to partner with the private sector,” said Nutter. “I’d highlight that as the top priority.”
According to Nutter, tax reform in the US is another big issue for the RAA.
“We, together with the PCI, will be working on the industry’s agenda related to tax reform, which will be another one of those things that should encourage economic activity that will benefit the insurance industry,” he said.
Nutter also stressed that 2017 will be an extraordinary year for catastrophes, with maybe $100 billion in insured losses from recent hurricanes just in the third quarter, coming on top of $22 billion of insured losses that occurred before the third quarter.
The industry can use this as an opportunity to demonstrate its worth to policymakers, he said. “For those of us who deal with government it’s really more about making sure that government doesn’t offer any restrictions about how the industry can adjust these claims and allow people to rebuild,” he said.
“In the past we’ve sometimes seen governments seeking to impose restrictions on the industry or the imposition of catastrophe bonds or similar. From my perspective it looks as though the industry is doing a good job of stepping up, paying claims and getting adjusters in.”
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