Reinsurance Market is Hardening

In class a couple of weeks ago, we discussed the difference between a soft market and hard market in the insurance industry.

A study from Benfield indicates that pricing trends in the global reinsurance market are changing as the beginning of the year renewal season approachs due to the credit crisis and increasing losses from Hurrican Ike. They predict a hardening of the reinsurance market.

Beinfield’s report, Capital Consequences – Billion Dollar Question, shows that while Hurricane Ike was only a Category 2 hurricance, it has been more costly than was previously predicted and losses are still climbing. The losses from the 2008 hurricanes have been amplified by companys’ investment losses.

Angie Coad, a member of Benfield Research stated that, “Losses and loss of confidence are a potent mix for changing behaviour. The onset of global recession and associated increase in cost of claims could act as a catalyst for both insurers and reinsures alike.”

http://www.strategicrisk.co.uk/story.asp?storycode=375156