REINSURERS GET TOUGH ON NATCAT EXPOSURES, SAYS WILLIS RE

Reinsurers have reacted to being hit by unmodelled or inadequately modelled catastrophe losses in 2011 by demanding greater transparency of data from primary insurers, and in other cases the reinsurers have sought to sub-limit their exposure, according to reinsurance broker Willis Re in its report on the January renewals. Entitled "Change is in the Wind", the report notes that the market was becoming increasingly segmented, with changes in rates increasingly being driven by individual loss history and perceived exposure changes. Willis Re noted that reinsurers had suffered little overall capital damage in 2011, which meant that "the key to a sustained market hardening is more likely linked to the current economic turmoil, particularly in the euro zone, as it works through to impact the capital bases of reinsurers". Willis Re noted that improvements in pricing for natural catastrophe risk had attracted new capital to the industry, mainly through specialized investment funds, rather than capital increases. It also noted that "the investment income outlook for all reinsurers is increasingly bleak".