The report reveals that reinsurance demand has increased over the past 18 months, with the cession ratio across the global property and casualty insurance industry registering a small rise for the first time in several years, and the trend expected to continue for the remainder of 2016.
Meanwhile, the report highlights four key emerging areas of growth for the re/insurance industry:
- Property Catastrophe – demand for property catastrophe protection is expected to remain relatively stable for
January 2017renewals, absent any material reinsured loss events. While certain regions affected by regulatory changes may look to secure additional capacity, overall demand change is expected to increase by approximately five percent across the market.
- Mortgage – the demand for re/insurance of US mortgage default exposure continues to grow, driven by both new and existing cedents. Most of the re/insurance purchased is driven by new regulatory capital requirements, as government entities Fannie Mae and Freddie Mac continue to access private markets for credit risk transfer. To date,
Aon Benfieldhas placed around USD10 billionof reinsurance capacity in this sector, which equates to approximately USD2.5 billionof projected lifetime ceded premium.
- Cyber – demand for cyber insurance coverage and product continues. With approximately
USD1.7 billionin premium, nearly 90 percent of the market is based in the United States, with annual growth running at 30 to 50 percent. International growth will be driven by upcoming European Unionregulations covering data protection that will become effective in 2018.
- Crop – While a more mature market, crop re/insurance has returned to profitability in the US. Growth has mainly emanated from
Asiawith the Indian market seeing five times the insurance premiums for the 2016/2017 season compared to the year prior. Thailandhas also seen growth, albeit not as significant.
The report further reveals that the low interest rate environment that has persisted in the developed world since the 2007 financial crisis has had a pervasive effect on traditional re/insurance carriers that are mainly invested in cash and bonds, and has significantly influenced market behaviour.
The full report can be found at http://aon.io/2c687qL
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