Agency predicts reinsurance rate rises
Rating agency AM best expects last month’s earthquake in Christchurch, New Zealand to erode the capital bases of some local non-life insurers, prompting rating actions.
However, the agency said in a report that the quake would be an earnings event for global reinsurers, and should not affect their ratings.
Even so, cedants should expect reinsurance price increases in the Australia/New Zealand region at the forthcoming renewals season, AM Best said, as catastrophe losses have accumulated to hit reinsurers’ profitability.
The region has had a run of natural catastrophes in recent months. Christchurch was hit by an earthquake in September last year, and Australia has been ravaged by flooding and Typhoon Yasi.
AM Best said it could take months for the scale of losses from the February earthquake to be determined. Many insurers and reinsurers have had to increase loss estimates from the September earthquake, and the agency said some companies may therefore be more cautious about releasing loss estimates for the latest event.
Catastrophe modeller AIR Worldwide has predicted that losses could be as high as US$8bn.