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Survey: 32% say Covid-19 to increase reinsurance & retro buying

31st March 2020 - Author: Steve Evans

With already a few hundred responses collected from our new survey on the re/insurance market implications of the Covid-19 coronavirus pandemic, it’s clear the market is expecting that long-term the crisis will drive an appetite for greater protection.

Our survey is still open and we’d appreciate you adding your opinion to the data we’re collating on insurance and reinsurance market perceptions and thoughts around the effects of this coronavirus outbreak.

The survey, created alongside sister publication Artemis, seeks to increase the market’s understanding of the potential implications based on the views of those working within it.

The data we’re collecting through the survey will act as a snapshot of these unprecedented times in an effort to create practical data to help inform future actions.

Please respond to our survey here.

We’ve analysed the data from responses received so far and already there are useful conclusions emerging.

One of those, of particular relevance to the reinsurance market at this time, is an expectation that the impacts and effects of the coronavirus outbreak, be they direct losses or macro-economic, are likely to drive an increasing appetite for protection among reinsurance and retrocession buyers.

Roughly half of our respondents say they have some input to reinsurance or retrocession buying within their businesses and the vast majority of respondents are from insurers and reinsurers.

We asked how the pandemic might change appetites for buying reinsurance and retrocessional protection.

In total, around 32% of current respondents say they expect this will increase their company’s appetite for buying reinsurance and retro, suggesting an upswing in demand as a result of the currently challenging environment. Over a quarter of this set of respondents believe the appetite for protection will be much higher.

Almost 60% said they expect no significant change to their appetite for reinsurance or retrocessional protection, while just over 8% said they expect the coronavirus pandemic could shrink their appetite for protection.

Of course, the size of balance-sheets, access to funding sources and how this all impacts solvency capital requirements of cedents will likely be a key driver here. But a sizeable chunk of the market is clearly expecting to buy more protection as a result of the fall-out of Covid-19, as evidenced by the early results of our survey. The question will be whether the capacity is available and at what price?

Please share your views and respond to our survey here.

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