Aspen Re CEO On Hardening Market
Only catastrophe-exposed and loss-affected reinsurance contracts experienced any significant upward movement in rates at the January 1 renewals, according to one top Bermuda executive.
During a recent conference call, Aspen Re CEO Brian Boornazian said the “insurance and reinsurance markets are starting to accept the need for change,” as the markets start to recognize that the risks taken need more rate for adequate returns.
However, more change is needed “to reach rate levels that are adequate for exposures and other external factors that affect our industry’s profitability,” Mr. Boornazian said from Bermuda.
A Bermuda-registered global specialty insurance and reinsurance company, Aspen Re operates primarily on the island and in London and the United States.
Insurance journal “Property Catastrophe 360″ reported Mr. Boornazian as saying several indicators -— high catastrophe losses, the release of RMS Version 11.0 and low investment yields — point to the formation of a hard market. Mr. Boornazian said the market began to harden only in certain lines at January 1 renewals, but it is “not a classic hard market.”
According to Aspen Re’s head executive, rates at January 1 renewals rose between 7.5 percent and 15 percent for larger property insurers and excess-and-surplus lines writers in the US. More increases were seen on contracts affected by losses.
Turning to Europe, the renewal season for property business saw only low-single-digit percentage increases, Mr. Boornazian said.
In Asia, January is not a significant time for reinsurance renewals. Real change here is needed, Mr. Boornazian said during the call, but “early signs are that we will see inconsistent corrections.”
Rate improvements in casualty reinsurance “remains elusive” internationally, he added, but the US casualty market saw pockets of rate increases in response to contracts with loss development, “and very limited requests for rate decreases.”
