Reinsurance & ILS demand to rise but price is key, finds global market survey

LONDON, Sept. 6, 2018 /PRNewswire/ -- A global reinsurance market survey conducted by leading sector publication Reinsurance News, in association with its sister the longest-standing insurance-linked securities (ILS) focused title Artemis.bm, suggests that market conditions may remain challenging for some.

Reinsurance News and Artemis have teamed up to take the temperature of the global reinsurance market at what is a key time for the industry.

The survey results show that overall there could be more demand for reinsurance capacity at the upcoming key January renewal season, but that buyers may be demanding and price will be a key bargaining factor.

"With this survey we wanted to take the temperature of the global reinsurance market at what is a key time for the industry," explained Steve Evans, Owner and Editor-in-Chief of the two publications.

"We've seen dramatic changes in reinsurance market dynamics over the last few years, not least the evolution and expansion of the insurance-linked securities (ILS) market.

"As a result, we wanted to reach out to senior decision makers in the industry with our survey and analyse their responses to see what we can learn in advance of the renewals at the end of this year," Evans continued.

The survey was conducted in August 2018 by direct outreach to senior reinsurance industry contacts and through the global readerships of both Reinsurance News and Artemis.bm.

Hundreds of responses from identifiable participants were received, including numerous from reinsurance market CEO's and other senior decision makers. In total over 62% of the respondents provide input to or are responsible for reinsurance buying decisions.

Highlighted insights from the results of the Reinsurance News and Artemis.bm survey include:

• Generally, pricing is expected to be relatively flat across most lines of reinsurance business, with the most significant rate increases anticipated for U.S. property catastrophe risks following the losses of 2017, retrocessional protection, as well as certain underperforming or emerging lines of business. However, even these lines are only expected to experience rate rises in the low single digits. Overall, the feeling is that rate momentum will continue to fade at the January 2019 renewals.
• Half of respondents believe that it will take a catastrophic loss of more than $200 billion, with the majority opting for a loss of more than $250 billion, to drive a meaningful turn in market pricing.
• Insurance-linked securities (ILS) and third-party capital is expected to expand further and claim an increasingly larger slice of the overall reinsurance market pie. The expectation is that the ILS market will account for between 20% and 25% of dedicated reinsurance capital by 2020. At the same time, 65% of our survey respondents said they plan to use more ILS capital within their businesses.
• Reasons for purchasing reinsurance protection remain varied, but earnings protection and reducing catastrophe exposure were the two most important factors to those surveyed. Regardless of the reasons, a large majority of respondents plan to purchase a similar level of reinsurance protection or a little more in 2019, suggesting a slight uptick in demand.
• Finally, we asked the respondents to rank the key factors that they would consider when choosing a reinsurance counterparty for the renewals and price was ranked as the most important, followed by credit quality / rating.

The full results of the global reinsurance market survey provide a useful test of the temperature of the industry at this key time, offering insight on sentiment and expectations as we move towards the January 2019 reinsurance renewals.

"We hope that market participants find the results enlightening and useful in making their strategic decisions for the renewal season ahead," Evans explained.

"We're making the full results freely available and we're happy to discuss them with any industry participants. We'll also be analysing the full reinsurance market survey results over the coming weeks on both Reinsurance News and Artemis.bm," Evans concluded.

Analyse the results of the global reinsurance market survey here.

About Reinsurance News:

Reinsurance News (www.reinsurancene.ws) is a fast-growing publication devoted to the global reinsurance industry. With more than 62,000 unique readers from over 140 countries in August 2018, Reinsurance News has the largest audience devoted to reinsurance on any medium.

About Artemis.bm:

Artemis (www.artemis.bm) is the longest-running publication devoted to the insurance-linked securities (ILS), catastrophe bond and alternative reinsurance capital markets, with more than 50,000 unique readers each month, having originally launched in the late 1990's. Artemis is relied upon by investors, ILS fund managers, reinsurers and insurers to keep their pulse on the evolving risk transfer and reinsurance market, with a particular focus on how efficient capital is creating structural change.

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SOURCE Reinsurance News and Artemis.bm