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Insurers are retaining more risk and ceding less to reinsurers, starving reinsurers of premium. At the same time reinsurance rates continue to fall. Meanwhile, reinsurers have lost out to alternative capital providers that have taken a significant slice of the property catastrophe market, according to Andrew Matson, Managing Director of Aon Benfield ReSolutions.
As a result, reinsurers are 'hungry' for business and looking to access insurance and alternative distribution, either directly or by partnering with brokers, distributors or insurers, he said.
"The market is softening and we see an increased desire among reinsurers and alternative capital providers to access distribution. We are likely to see more creative wholesale bulk transactions and a more efficient distribution chain. While for very large and complex risks there may be the opportunity for more bespoke solutions," said Mr Matson.
The soft reinsurance market is presenting an opportunity for risk managers that can articulate their risks and demonstrate demand for solutions, according to Mr Matson.
"In today's market it is now much easier to put bespoke solutions together. Insurers and reinsurers are being more creative," he said. "This is only just starting, but risk managers need to open up and tell their broker everything about their businesses in order to see what they can hedge," said Mr Matson.
"Risk managers need to articulate the risks that threaten their balance sheets if they are to get a targeted solution. In a soft market, insurers and reinsurers are now much more willing to consider them and help develop solutions. If you can demonstrate demand, insurers and reinsurers will work to provide a solution," said Mr Matson.
Low premium rates, good loss experience and diminishing margins in an arena of surplus capital are prompting reinsurers to be more creative in their product offering, agreed Matthew Haine, SVP at Guy Carpenter Fac.
"Risk managers can enhance their insurance programmes with a more cohesive and blended insurance/reinsurance approach with a range of products supported in the reinsurance market such as self insured retention protections, broadening of coverage, increase in vertical limits and expansion of natural catastrophe limits," according to Mr Haine.