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MONTE CARLO, Monaco —The reinsurance industry continues to adapt to the challenges posed by abundant capacity and buying habit changes, according to Guy Carpenter & Co. L.L.C.
“The long predicted consolidation” in the insurance industry is underway and inevitably will have an effect on buying patterns, Guy Carpenter President and CEO Alex Mozcarski said Saturday during a briefing as part of the Rendez-Vous de Septembre prerenewal reinsurance gathering in Monte Carlo, Monaco. Many cedents are using smaller panels of reinsurers and retaining more risk, he said.
Rate decreases have slowed for U.S. property catastrophe business, notably U.S. wind exposures, said David Priebe, vice chairman of Guy Carpenter, in part because many reinsurers have diversified into lines of business where rate declines have not been so pronounced.
The U.S. casualty market continues to soften driven, in part, by a migration of capacity from still-soft property catastrophe business, although the pace of decreases has been tempered by underwriter caution in entering casualty lines.
Reinsurance buyers in the Europe, Middle East and Africa will hope for rate decreases at the upcoming Jan. 1, 2016, renewals, but many underwriters “are now near to technical minimums,” said Nick Frankland, CEO of the EMEA region for Guy Carpenter, meaning that reinsurers may show discipline and not reduce rates further.
A trend for blended, multiyear, multiperil programs likely will continue, he said.
And consolidation will lead to greater competition for reinsurance business, which should benefit buyers, he said.
Munich Reinsurance Co. has said that damage claims from the recent explosions at China's Tianjin port would not affect its forecast to earn at least €3 billion ($3.4 billion) in 2015, reported Reuters.