Insurers’ reliance on reinsurance raises possibility of concentration risk

Charlotte Gerken, executive director for insurance supervision at the Bank of England, said the U.K.’s Prudential Regulation Authority is closely examining the potential for an overconcentration of risk due to insurers’ overreliance on reinsurance, Reinsurance News reported. Ms. Gerken said: “The PRA is paying close attention to the potential for offshore counterparty concentration risk resulting from rapidly growing levels of reinsurance, and concentration risk to certain groups of assets due to the sharp incentives offered by the current MA design.”