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HAMILTON, Bermuda — Market conditions will remain challenging at Jan. 1 renewals, but prices will fall less than in recent past cycles, according to a panel of reinsurance industry leaders speaking at the 2015 Standard & Poors/PriceWaterhouseCoopers Bermuda Reinsurance Conference, “Reinsurance Reshaped,” in Hamilton on Tuesday.
One senior reinsurance broker “came out with an estimate of a 10% to 12% rate reduction,” at the recent reinsurance meeting in Baden Baden, Germany, Oct. 23-27, but “did not put his name to it,” said Charles Withers-Clarke, partner, JLT Re Bermuda Ltd., in Pembroke, Bermuda.
JLT, he said, does not like giving out forward information on rates because “every client is individual, and markets — they act irrationally at times,” said Mr. Withers-Clarke.
“Have we found a floor? Probably not,” said Mr. Withers-Clarke.
Pressure on rates will likely persist through Jan. 1 renewals.
“These trends, I think, will likely continue,” said Bryon Ehrhart, CEO of Aon Benfield Americas and chairman, Aon Securities, in Chicago.
“People look at years like this with no losses and see additional pressure. That's just natural,” said Mr. Ehrhart. He added that Aon Benfield also does not issue forward guidance, limiting that information to confidential client briefings.
“It's been rough, and unfortunately, I don't disagree with these guys,” said Greg Haft, head of worldwide catastrophe reinsurance business for PartnerRe Ltd. in Pembroke, referring to the preceding comments of his fellow panel members.
He did, however, offer a ray of hope.
“I do think there has been some change,” said Mr. Haft. “In 2015, we saw what I would call a firming of pricing, not a hardening.”
Capital markets keep gaining traction in the reinsurance space, and players see continued growth despite lingering concerns, according to sources speaking on the sidelines at the Property Casualty Insurers Association of America annual conference Oct. 25-28 in Hollywood, Florida.