Print Friendly, PDF & Email

trends reinsuranceThe market for reinsurance continues to grow as industry participants look for ways to manage risk, returns and volatility, according to a new report by broker Aon Benfield titled “Reinsurance Market Outlook: Capacity Demand Narrows as Demand Picks Up.”

The Aon Benfield report projects the outlook for four primary reinsurance market segments, as outlined below.

Property catastrophe

Moderate growth in the 5 percent range is expected in the market for property reinsurance, based on recent loss history, according to the Aon Benfield report. The types and terms of property catastrophe reinsurance are evolving, including more multi-year coverage.

Mortgage Insurance and Reinsurance

New “Private Mortgage Insurer Eligibility Requirements” (PMIERs) took effect as of December 31, 2015 for Fannie Mae and Freddie Mac mortgage loans. The revised requirements for private mortgage insurance companies set certain financial and operational standards that must be met in order to receive approved insurer status with the two leading mortgage regulatory agencies.

According to the Aon Benfield report, the new standards are behind continued growth in the market for mortgage-related primary insurance and reinsurance. Also noted is the recent acquisition of mortgage guarantor United Guaranty, a former AIG unit, by Arch for $3.4 billion.

Cyber Reinsurance

The market for cyber insurance is primarily U.S.-based at the present time, with an estimated $1.7 billion in premiums written. Growth rates of 30 to 50 percent are forecast for the U.S. cyber market.

International demand for cyber reinsurance is also expected to increase once the European Union privacy regulations take effect in 2018.

An increasing awareness of the potential magnitude of cybersecurity events is one factor behind the segment’s rapid development. Product offerings for both primary cyber insurance as well as reinsurance for the cyber market are also evolving.

Crop

Much of the growth in the market for crop-related reinsurance is being driven by the international sector, according to the Aon Benfield report. In Asia, the Indian market alone is responsible for a quintupling of insurance premiums in the 2016/2017 season in comparison to the 2015/2016 year. Thailand is also seeing rapid growth. As other Asian economies mature, countries that have not historically utilized insurance and reinsurance in the crop market are beginning to implement risk management systems.

Leading players in the U.S. crop insurance industry have changed following a series of major mergers and acquisitions since 2015, as we discussed in a blog post earlier this year titled “Crop Insurance Industry Undergoing Changes.”

Bill Hager’s Experience as a Reinsurance Expert

Mr. Hager has extensive experience with reinsurance mechanisms and relationships, as outlined below.

Reinsurance Arbitrator. Mr. Hager is certified by AIDA Reinsurance and Insurance Arbitration Society, United States (“ARIAS-U.S.”) as an arbitrator for reinsurance and insurance matters. ARIAS-U.S. certifies knowledgeable and reputable professionals for service as panel members in reinsurance and insurance arbitration matters. The organization’s criteria for certification is as follows:

  • 10 years of significant specialization in the insurance/reinsurance industry;
  • Arbitration experience- must have completed appropriate credited ARIAS seminars;
  • A member in good standing of ARIAS-US; and
  • Appropriate endorsement from existing members.

Regulatory Aspects of Reinsurance

While Commissioner of Insurance in Iowa from 1986 to 1990, Mr. Hager oversaw all facets of insurance regulation including oversight over all licensed insurers and their related reinsurance relationships. He dealt regularly with reinsurance and its relationship to primary insurance. His responsibilities included:

  • Oversight over insurance companies / reinsurance;
  • Examination of insurance companies;
  • Examinations / reinsurance;
  • Annual statement reinsurance reporting for both life health and property casualty insurers;
  • Admission of reinsurers to do business in the state;
  • Approval of reinsurance transactions;
  • Validation of risk transfer;
  • Department reinsurance expertise and training;
  • Reinsurance regulations; and
  • Unwinding reinsurance transactions.

Disclaimer

Material for this article was taken from a collection of industry sources relating to the subject.

In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.

This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.