WILLIS SAYS P/C REINSURANCE RATES “FLAT OR FALLING MODESTLY”

Global Broker Willis has claimed as part of its review of the January 1 2007 renewals that p/c reinsurance rates were generally flat of falling modestly. The broker said that in Europe, Asia, Australia, Latin America and the parts of the US not prone to natural catastrophes, rates were flat or had fallen between 5% and 10%. One exception was wind-exposed Northern Europe multi-territory covers, where Willis conceded that rates were “firm”. Another major exception was in the US property sector, if an insurer had significant East Coast or Gulf Coast wind-exposed business. Here Willis attributed the hard market to five “macro factors”. The mid-2006 pricing levels saw increases of about 40%, and reinsurers were seeking to bring January renewals into line with this, Willis said. In addition, Willis claimed that reinsurance pricing was “reflecting the perception of increased volatility that is embedded in the latest property catastrophe models”. Reinsurers were also trying to recoup losses from the disasters of 2005, and there was a new appreciation of the likely cat exposure in the north-eastern US. Finally, Willis conceded that “there is simply not enough retrocession capacity for reinsurers to spread their catastrophe risks”.