Reinsurance News

Price to be the key driver for reinsurance buyers at 1/1: Survey

27th September 2018 - Author: Luke Gallin

Overall, almost 60% of respondents to our global reinsurance market survey feel that price will be the most important counterparty feature to reinsurance buyers at the January 2019 renewals.

As part of the Reinsurance News and Artemis global reinsurance market survey, we asked industry participants to rank, by order of importance, what counterparty features will be most important to reinsurance buyers at the January 2019 renewals.

In total, price came out on top, with just under 60% of survey respondents stating that price will be the most important factor at 1/1.

Despite the industry experiencing heavy catastrophe losses in 2017, reinsurance pricing has failed to improve in either a meaningful or sustainable manner throughout 2018.

Rate improvements that did materialise are reportedly fading and this trend is expected to continue into 2019, with stable pricing expected at the January renewals amid continued competition from both traditional and alternative providers of capacity.

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With so much pressure on balance sheets and an increasing need to remain relevant in a rapidly changing sector, re/insurers are looking at ways to lower costs and improve efficiencies, so it isn’t too surprising that price was considered the most important counterparty party feature for reinsurance buyers at 1/1 2019, by more than half of our survey respondents.

At the same time, sellers of reinsurance capacity will equally be focused on efficiency at the January renewals, while also trying to beat the competition and navigate a challenging operating environment.

With this in mind, it will be interesting to see if a buyers’ market returns at 1/1, underlined by pricing and terms and conditions (T&Cs) that are more favourable to buyers of protection, and something that was very evident throughout the recent soft market.

After price, counterparty credit quality / rating ranked as the next most important, followed by reputation and then the ability to offer large lines / lead.

This was closely followed by a willingness to be flexible and ease to transact with, which, overall, received a rank of similar importance.

The ability to offer fully collateralized capacity ranked as the seventh most important counterparty feature, overall. While somewhat surprisingly, risk analysis & underwriting expertise ranked as the least important counterparty feature for reinsurance buyers at the January 2019 renewals, overall.

It’s important to note that the fact risk analysis & underwriting expertise ranked lowest isn’t because it always ranked as the least important. Essentially, over all of the survey respondents, in terms of all responses to this question, overall, it scored as the least important.

Price image survey

About the survey:

The Reinsurance News and Artemis global reinsurance market survey was conducted via direct outreach to our senior reinsurance and insurance-linked securities (ILS) market readership, across both Reinsurance News (62,000+ unique readers in August 2018*) and Artemis (55,000+ unique readers in August 2018*).

The survey includes responses from hundreds of identifiable re/insurance and ILS market participants, including numerous from reinsurance market CEO’s and other senior decision makers from across the space.

Overall, more than 62% of survey respondents provide input to or are responsible for reinsurance buying decisions.

Based on Google Analytics unique user numbers.

The full results of the survey are freely available online and we’re happy to discuss them with industry participants. We’re interested to hear your thoughts.

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