London, UK (PRWEB) December 31, 2012
December 31 2012 - With natural catastrophe losses for 2012 estimated at fifty percent less than last year’s losses of USD 120 billion, most reinsurers are not facing any material capital impact and remain within their annual catastrophe budgets. This has resulted in stabilisation of rates on property classes and no blanket rate increases at 1.1., according to the January 2013 renewals report from Willis Re, the reinsurance arm of Willis Group Holdings (NYSE:WSH), the global insurance broker.
The 1st View report, entitled ‘Reinsurers Clear the Sandy Hurdle’ finds that, in general, International rates for Property Catastrophe business are risk adjusted flat to -5% and U.S. rates for Property Catastrophe are risk adjusted flat to -5% on loss free accounts, and +10% on loss impaired accounts.
In the report’s opening letter, Peter Hearn, Chairman, Willis Re and John Cavanagh, CEO, Willis Re comment: “In the absence of Superstorm Sandy, reinsurers would have found it difficult to resist buyer pressure for further concessions. As such, Sandy’s impact has helped to stabilize market pricing on an overall basis and reinsurers have largely delivered to their clients in terms of capacity and continuity.”
According to the report, internationally, Sandy has caused little impact, and despite the addition to the market of new capital and promising 2012 underwriting results, it is the repercussions of the global financial crisis which still influence conditions and pricing in the sector: investment returns are dwindling, primary companies in most mature markets are finding growth difficult and larger primary insurance groups are restructuring the way they buy reinsurance.
The report highlights that 2012 has been particularly difficult for the Marine market, which has suffered one of its worst underwriting years in recent history. Already suffering from the Costa Concordia and the deterioration of the Rena loss from 2011, Superstorm Sandy is widely expected to be the largest ever Marine loss with a disproportionate impact on the Marine market. The report states that there are large losses coming from yachts and pleasure craft, general cargo, imported cars, specie and inland Marine. In addition, the 1.1. 2013 Marine renewals are especially late due to uncertainty surrounding losses emanating from Sandy.
Many buyers have increased retentions on loss hit programs to help mitigate rate increases which are a minimum of +15%, even on loss-free offshore Energy excess of loss contracts. The P&I market is seeing minimum of 10% increases with International Group Reinsurance Program +40%. P&I Clubs are passing on increased reinsurance costs via original General Increases in the range of +7.5% to +10%.
Other renewal trends highlighted in the report include:
Commenting on the conclusions of the report, Peter Hearn, Chairman Willis Re said:
“Overall, the global reinsurance market has maintained a measured and increasingly client-centric approach by providing adequate capacity to buyers, together with an increasingly differentiated approach at a client- and class-specific level. Final terms and conditions have, in most cases, been in line with client expectations, as reinsurers largely delivered on the undertakings they made in the run up to renewal.”
Click here to read the 1.1. renewals 1st View report in full.
About Willis Re
One of the world's leading reinsurance brokers, Willis Re is known for its world-class Analytics capabilities, which it combines with its Reinsurance expertise in a seamless, integrated offering that helps clients increase the value of their businesses. Willis Re serves the risk management and risk transfer needs of a diverse, global client base that includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. The broker's global team of experts offers services and advice that help clients make better reinsurance decisions and negotiate optimum terms. For more information, visit http://www.willisre.com.
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at http://www.willis.com