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Industry to seek more ILS solutions

A third of reinsurance buyers will buy more, or significantly, more reinsurance protection during his midyear renewal season, according to an industry survey.

While 22.5 per cent said they will buy less, some 41.5 per cent expect to purchase about the same.

Meanwhile, 45 per cent expect to use more insurance linked securities or third-party capital in their reinsurance or retro arrangements at midyear 2022.

The Reinsurance Market Survey – Midyear 2022 was conducted by Reinsurance News and Artemis, polling “hundreds of identifiable senior insurance, reinsurance & ILS industry executives, including 18 CEOs or partners, 22 CUOs, 12 COOs, as well as chairmen, vice chairmen, reinsurance buyers, senior underwriting executives, ILS managers, portfolio specialists and service providers.”

A full eleven per cent of those polled are in Bermuda, with those in Asia (11 per cent); United States (26 per cent); Europe (32 per cent).

Not surprisingly, the reinsurance community confirmed belief that some insurers could fail to fulfil protection requirements.

Nearly eight in ten, some 77 per cent of survey respondents, agreed they could see some buyers fail to purchase all of the reinsurance they need.

And they weighed in on strategies for companies that struggle to secure adequate reinsurance may adopt to manage through the rest of the year.

The respondents included regulators, government officials, corporate risk managers, those from MGA/MGU organisations and other service providers.

But they were mainly from insurers (32 per cent), reinsurers (26 per cent), reinsurance brokers (12 per cent), ILS fund or ILS investment managers (11 per cent) and insurance brokers (8 per cent).

More than 70 per cent said insurers would write smaller line sizes or reduce portfolios; nearly 43 per cent said they would buy back up protections or covers after the renewals period; 38.7 per cent said they would look to capital market alternatives, including derivatives; and, 25.3 per cent saw some companies completely withdrawing from some business lines

Nearly two thirds (65.3 per cent) felt reinsurance rate increases in June would be greater than those implemented in January. Nearly 31 per cent thought they would stay the same.

Six out of 10 (59 per cent) were certain that reinsurance buyers will not be able to fill reinsurance towers. Another 33 per cent said it would be slightly challenging, with only eight per cent expecting no challenges.

Major participation by Bermuda (re)insurance market executives in the The Reinsurance Market Survey - Mid-Year 2022(Photograph by David Fox)

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Published May 30, 2022 at 8:00 am (Updated May 29, 2022 at 4:07 pm)

Industry to seek more ILS solutions

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