Insurers are waiting for indications at next week's Baden Baden summit, says Andy Cook

Next week's reinsurance get together at Baden Baden is always a tense affair. The Monte Carlo Rendez Vous is a place where people meet and chat, Baden Baden is more about putting deals together in advance of the forthcoming reinsurance renewal season.

However, this year's Baden Baden will reach new heights of tension. Last year's event was pre-11 September. Rates were hardening. Terms and conditions were being influenced by events such as the Selby train crash. But it was very much the calm before the storm.

In between 11 September and 1 January insurers saw rates sky-rocket. Terrorism cover was excluded. Deductibles shot up by thousands of per cent. New terms and conditions returned more and more risk to the primary insurers.

So what will happen this time around? Insurers are hoping there will be relaxation in rates so that they don't have another set of significant hikes to pass on to their already squealing customers.

But reinsurers' financial results have been abysmal. Combine this will events like the massive European floods, a return of terrorism and a potential conflict in Iraq and reinsurers are likely to take the view that there will be significant claims on their policies.

So rates will rise significantly again.

Market sources also reckon that deductibles will continue upwards - even if it does seem that they couldn't get any higher. Of course, reinsurers are playing their cards close to their chest. Just as with some primary insurers, it doesn't matter how early you put your submission in, the price and terms will come back the day before renewal.

So if you were thinking about putting your risk forward early this year to beat the rush, it probably won't be worth it. Primary insurers would be unwise to second guess reinsurers, and probably won't.

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