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