Pricing not the key to outstripping competitors
Reinsurers must focus more on delivering quality service rather than pricing in order to survive, the International Cooperative and Mutual Insurance Federation (ICMIF) has warned.
Senior vice president of reinsurance Lars Erik Lundqvist said, as programmes that rate risks became more accurate and widely used, there was little to distinguish competing organisations. He said reinsurers would need to deliver better quality of service to rise above their competitors.
"Rating programmes have been around for many years, but are getting better," he explained. "After each catastrophe, companies have to re-rate so they are more and more accurate.
"Reinsurers now need to focus on understanding the needs of the insured and offering very quick responses to companies. They cannot survive if they are providing something substandard to the market."
Lundqvist said they should also look to reinsure broader risks, in areas such as agriculture, rather than concentrating on traditional oversubscribed lines.
"There is so much talent in the reinsurance industry that could be used in a much more efficient way," he said. "For example, agriculture is very underdeveloped in many countries and reinsurers could offer tremendous assistance to help this risk, rather than competing over pricing for additional industrial risks."
Lundqvist also predicted there would be a closer relationship between the new Bermudian start-up companies and the London Market. He said they would offer more quota share reinsurance treaties to Lloyd's syndicates in a bid to use up their capacity, and as insurers "like to be dealing with someone who has been there for a long time".