Three Questions: Hugo Crawley, BMS Intermediaries Ltd.

Among the many effects of the financial crisis is a change in the way many ceding companies are approaching reinsurance markets. Recently, Hugo Crawley, chairman of London-based BMS Intermediaries Ltd., spoke with Business Insurance Special Projects Editor Rodd Zolkos about some of the trends and developments he's seeing in the reinsurance market.

Q: Can reinsurance buyers expect any changes in market conditions as they head into 2010 renewals?

We were looking at the market hardening during the course of '09, and I think people were putting out predictions early in the year about what a more exciting market it was going to become, which obviously didn't take place. I think that the ability of people to actually capitalize and get capital, put their balance sheets back in order after a pretty abysmal and difficult time on the investment side during the course of '08 meant that markets didn't get or didn't have to go out and reload. And from the result of what took place in the course of '09, we didn't see the hardening of the market in '09. And I can't really see much reason that it will change during the course of this year.

What we saw in property catastrophe reinsurance pricing through the middle of the year was further increases. Obviously, we saw what took place in Florida and further increases taking place on wind-exposed business in the Gulf. But we really didn't see any primary market hardening and, if anything, we've seen it just getting softer pretty well across all lines of business. And I think now that people are looking at a quiet hurricane season, touch wood, what looks like a quiet hurricane season, barring no major catastrophes between now and the end of the year, we're looking at what we think will be a softer market for the 2010 renewal season.

Q: Are your clients rethinking their reinsurance strategies in the wake of the financial crisis?

I think that clients of ours looking at it look at how the market is shaping up, and it's more about getting further spread of risk in order not to have any one market—be it London, Bermuda, other domestic or international reinsurers. It's not about putting all your eggs in one basket, but it is a concern about…in the event that there was a major catastrophe in the market, who is best able to reload and who's actually got the best balance sheets.

Q: So ceding companies are emphasizing spreading exposures across multiple reinsurers?

I probably sort of get on my high horse on it because I've talked about it before and talked about how we've seen it. Certainly when I was being brought up in the industry, people used to talk to me about getting 100 lines at 1%, which of course would never happen, never did happen, but we are returning to people seeing a more ideal platform of having a panel of markets where you'd get 15 to 20 reinsurers-plus involved in a major catastrophe program.