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Member, Beacon International Group, Ltd.
MONTE CARLO, Monaco— Rates for most reinsurance lines likely will soften further or remain flat at the upcoming renewals, in the absence of any major loss, according to Guy Carpenter & Co. L.L.C.
Despite an above-average number of catastrophes during 2010 to date, rates for most lines of reinsurance have fallen or remained flat, Chris Klein, global head of reinsurance markets at Guy Carpenter, said during a briefing at the reinsurance Rendez-Vous de Septembre in Monte Carlo, Monaco, Saturday.
Price increases have only been seen in loss-affected lines such as offshore energy or Chilean earthquake coverage, Mr. Klein said.
It likely would take a major loss, a series of major hurricanes or earthquakes, or an earthquake in a so-called peak zone to turn the market, he noted. A “surprising” loss, such as that experienced by the market with the Sept. 11, 2001 terrorist attacks, which caused underwriters to rethink the nature of certain potential losses, could also have a market-turning effect, he said.
The reinsurance industry currently has plentiful capital, according to Mr. Klein. And while returning some of that capital to shareholders through buybacks or dividends can provide some capital relief, such measures come at the expense of future growth.
Guy Carpenter urged clients and reinsurers to explore innovative ways to use that excess capital.
One such innovation is microinsurance, whereby low premium, low limit insurance coverage is sold, usually through a pooling arrangement, to low income buyers not typically served by commercial insurance.
Guy Carpenter is active in microinsurance which serves both a commercial and a social need, noted Henry Keeling, president and CEO of Guy Carpenter's international operations.