15 September 2015 Insurance

Signs of stabilisation in market: JLT Re

Pricing remains under pressure across most lines of business in the reinsurance market (as of June 1 and July 1), but there are some early signs of stabilisation in certain segments, Mike Reynolds, global CEO, JLT Re, said at a briefing in Monte Carlo.

The report, called JLT Re Viewpoint Report, Change in the Air, analyses the key developments that triggered nine consecutive major renewals of falling prices leading up to June 1, 2015 and how new dynamics during this year’s mid-season renewals saw downward pricing pressure ease for the first time since January 2013.

Reynolds said: “The flattening trajectory of reinsurance rates during these renewals indicates change is again underway. Increased demand for reinsurance, an easing in the rate of alternative capital entry and reinsurer consolidation are coalescing to create an eventual pricing trough.”

David Flandro, global head of analytics, JLT Re, added: “Low loss experiences, new capital inflows and changing behaviours among reinsurance buyers, characterised by reduced cessions and smaller reinsurance panels in particular, dominated reinsurance renewals between 2012 and 2014.

“These trends culminated in steep pricing declines, pushing rates for certain market segments to their lowest levels since the early 2000s as competition from alternative capital providers prompted reinsurers to adapt and innovate to defend market share.”

Flandro said now is the time for buyers to review strategies and relative costs of capital.

“Today’s environment of abundant capacity, coupled with a renewed focus on innovation, provides an opportunity for carriers to make genuine strides in creating new solutions for underinsured risks, including comprehensive flood and terrorism coverage, and the development of cover for relatively new risks, such as cyber, reputational, supply chain, fourth generation nuclear and autonomous vehicles, to name a few,” he said.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk