Last year's unprecedented catastrophe losses had an uneven impact on pricing and capacity at 2006 reinsurance renewals, according to a report published by Benfield.
Benfield's report, titled Swings and Roundabouts, finds that the hurricanes caused dramatic increases in reinsurance rates in the US, particularly for property catastrophe business in loss-affected areas and in the non-marine retrocession and marine reinsurance markets.
Elsewhere the hurricanes had a generally stabilising influence, reversing the downward price trend.
Grahame Chilton, chief executive of Benfield, said: “The immediate impact of the hurricane season fell short of the market changing event some expected. However we believe that the market has changed. Continuing development of 2005 losses, recalibration of catastrophe models and the shrinking appetite for peak exposures are some of the factors which will exert further upward pressure on pricing.”
Chilton continued, “Reinsurance capacity is likely to be significantly tighter for 1 July renewals and beyond and this is likely to lead to a general re-rating across global markets.”
According to the report, loss affected property catastrophe treaties in the US experienced the most substantial price increases, of more than 100% in some cases.
Loss-free property business in the US was up 10-20%, compared with price falls of up to 20% in January 2005.
A worldwide post-renewal survey of Benfield brokers conducted during the past two weeks found that cost was the primary concern for 33% of reinsurance customers. Security and ratings was a concern for 27% and coverage, terms & conditions for 23%.
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