1 January renewal season sees rates fall by up to 15%
Reinsurance rates in the 1 January renewals season plunged by as much as 15% on the back of low catastrophe losses in 2007, according to reinsurance brokers.
Willis Re said all lines of business had shown signs of softening, although the level of competition varied.
It highlighted US property reinsurance rates as demonstrating a “precipitous” decline of 15% in some cases.
In contrast, classes such as marine showed only “modest” softening.
Guy Carpenter reported that property catastrophe rates were down by on average 9% across all markets at 1 January 2008 renewals.
US programmes saw slightly larger than average decreases of up to 12%, while the UK and Europe witnessed falls of around 7%.
Guy Carpenter said the absence of large catastrophe losses in 2007 was the primary factor in the overall softening of reinsurance markets.
Chris Klein, global head of business intelligence at Guy Carpenter, said: “Barring large catastrophes in 2008, we expect to see the downward drift in rates that we have seen recently to continue through 2008 and into 2009.”
According to Swiss Re, natural and man-made catastrophes led to $61bn of overall financial losses globally in 2007.
Insured losses amounted to $25bn, which was $9bn higher than 2006, but below the long-term trend.
Munich Re last week estimated insured catastrophe losses to be $30bn in 2007.
Significant catastrophe events included the UK’s summer floods, which cost insurers over £3bn, Windstorm Kyrill in northern Europe and the wildfires in California and Greece.
Global credit market issues had little effect on the renewal season, the reinsurance brokers said.
Peter Hearn, chief executive of Willis Re, said: “Reinsurer impairment from the sub-prime debacle appears limited, and although losses are ultimately anticipated in specialty segments such as directors’ and officers’ liability, conventional classes appear to remain well insulated from exposure.”