Speaking at the launch of its 2012 global reinsurance outlook, Catastrophes, Cold Spots and Capital: Navigating for Success in a Transitioning Market, the broker’s Head of EMEA, Neil Frankland, said the renewals have seen underwriters take a very case by vase approach to pricing but on average, prices had risen across many classes as the full impact of the catastrophes of 2011 and changes to modeling assumptions were felt.

He explained that reinsurers were in a position to undertake a major review of pricing and underwriting going into the renewal season. This led to significant market fragmentation and increased market volatility at January 1.

The report said there were wide-ranging rate movements at national, regional and even local levels, depending on loss experience and exposure perceptions. The broader reinsurance market experienced mixed renewals. Despite the prospect of sustained low interest rates, rate movements for casualty lines continued to be subdued. Most other lines also saw moderate price changes, with increases and decreases in the low single digits. 

David Flandro, Guy Carpenter Global Head of Business Intelligence: “Near-record catastrophe losses that were second only to 2005, catastrophe model changes and a challenging macroeconomic environment put considerable pressure on the industry in 2011. Unlike 2005, however, reinsurers were well prepared. They were able to pay claims, and the market did not suffer significant dislocation. Today, the sector remains fully functional and adequately capitalized, in part due to the strengthening of enterprise risk management practices over the last few years.”

Alex Moczarski, Guy Carpenter President and CEO added: “The complex January 1, 2012, renewals were a culmination of a difficult twelve months, with the expectation of another challenging year ahead. However, for companies equipped with the proper tools and insights, challenges can become opportunities. With the publication of our global reinsurance outlook, we seek to arm clients with best-in-class market intelligence on our sector’s rapidly evolving dynamics. And by continuing to provide real time, in-depth analysis of shifts in market behavior as they occur, we can help our clients differentiate themselves in the marketplace and achieve the best possible outcome.”