Reinsurance costs declining
Reinsurance costs declining

Noticed this in  the Financial Times:

Reinsurance costs set to decline

The prices that insurers pay to offload some of their risks to the global reinsurance industry are to drop for a second year after a lack of very expensive disasters and struggling economies have put pressure on rates.

Premium costs are set to fall 5-10 per cent globally at the key January 1 renewal date, when more than 60 per cent of all non-life reinsurance contracts are renegotiated. The decline is not as big as some in the reinsurance industry had feared, according to experts at the three leading brokers.

The story of 2010 was one of near misses for the industry, as high levels of natural and man-made catastrophe activity led to surprisingly moderate losses.

Three large earthquakes in Haiti, Chile and New Zealand led to less than $11bn of total losses because of low relative insured property damage, while the second most active Atlantic hurricane season on record somehow saw no storms make costly landfall in the US.

The most expensive event of the year, BP’s $20bn-plus oil spill in the Gulf of Mexico, caused only about $1bn of insurance losses as the UK energy group retains most of its own insurance risks.

James Vickers of Willis, the third-biggest global broker, said: “This was a year when reinsurers slightly got away with it. There were some losses, so underwriting results will not be as good as 2009, but the industry is in good shape and there is a degree of over-capitalisation.”

Dominic Christian, chief executive of Aon Benfield, Willis’s larger rival, said that in spite of the losses that occured, reinsurance capital remained well in excess of demand from primary insurers, many of which are struggling to maintain their own rates as economic activity recovers only slowly in most parts of the world, and especially the developed world, where most policies are sold.

While not significant in and of itself, imagine the cacophony of noise the anthropogenic global warming crowd would set up if the movement had been in the other direction. We will know sanity is reasserting itself when reports that can be spun to suggest global warming get the same media coverage as this one. Have you seen this reported on the TV, newspaper and radio? I think not.

Mind you, given the attempts to use global coldening as evidence of global warming almost anything can be spun, if your ideological drive is strong enough.

The Financial Times link requires registration (free). But Bloomberg have posted here.