There is growing evidence to suggest that buying strategies, as we once knew them, have changed dramatically. The emergence of non-traditional reinsurance solutions, technology and enterprise risk management are just some of the current influences affecting how reinsurance is bought.
It is not unusual for today’s cedant to be both a buyer and seller of reinsurance. Furthermore, companies are increasingly international and this poses a much greater challenge. The emergence of enterprise risk management – determining the entirety of a company’s exposures and risk transfer needs – has helped purchasing decisions to be made on a group-wide and not a silo basis.
The growth of insurance-linked securities (ILS) in the past two years has been astounding. Catastrophe bonds, sidecars, industry loss warranties and weather derivatives have grown ever-more sophisticated and this has increased choice. In the hard market following Hurricane Katrina, these capital market solutions became a popular alternative to expensive, unavailable property catastrophe reinsurance. Currently, the ILS market is valued at around $30bn, of which $18bn is in life and $12bn in non-life. Many first-time issuers now include primary insurers.
“The growth of insurance-linked securities in the past two years has been astounding
As the industry prepares to descend on Monte Carlo for another Rendez-Vous de Septembre, diaries will be once again filled with meetings. Do these face-to-face meetings retain their significance in an increasingly electronic age? And will Casino Square be thronging with hedge fund and institutional investors, and will they be welcome?
The consensus from our panel of experts was that yes, buying strategies and buying relationships are changing, but it won’t happen overnight.