Reinsurance News

“Conditions are right” to buy more catastrophe reinsurance: JLT Re’s Ed Hochberg

31st August 2018 - Author: Matt Sheehan

Ed Hochberg, Chief Executive Officer (CEO) of JLT Re in North America, has suggested that primary insurers are increasingly understanding the value of reinsurance following 2017’s catastrophe losses, and claimed that the “conditions are right” for them to buy more cover.

JLT Re logo“It’s clear that primary insurers increasingly recognise the valuable role that reinsurance plays,” Hochberg said in JLT Re’s Summer 2018 Risk Perspective report. “Primary insurers rely more on reinsurance support in uncertain times and right now they have a lot to think about.”

He explained that Hurricanes Harvey, Irma, and Maria came after a long, relatively benign period for catastrophes and reminded insurers that large loss events still happen and can be outside of expectations.

“I believe HIM has certainly stabilised the trend for insurers to buy less property cat reinsurance coverage; for some it will be a wake-up call to buy more cover,” said Hochberg, adding that they should do so now while reinsurance is still “really good value.”

Hochberg also noted that, while opinions on the economic outlook are mixed, it seems like the exposure base is growing and pushing up premium levels.

Stratumn, by SIA Partners

This is a positive trend factor for the market, he suggested, although the counterpoint could be an uptick in claims frequency, with rising inflation further exacerbating the loss situation.

“Buyers have seen how effectively reinsurers managed their own capital and made use of third-party capital,” Hochberg added. “Reinsurers’ balance sheets have never been stronger and counterparty risk is as low as it’s ever been.”

“The traditional market functioned as it should, as did the insurance-linked securities (ILS) market, proving that alternative capital really is here to stay,” he continued. “The losses of 2017 actually helped cement the investment thesis for a lot of ILS managers and their clients.”

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