BROKERS SAY RENEWAL PRICING IS DOWN

International brokers Willis and Guy Carpenter, the reinsurance broking arm of Marsh, have said that January 1 reinsurance renewal rates are down by an average of 9% (Guy Carpenter) or between 10% and 15% (Willis), compared to last year. Willis chairman James Vickers said that “despite a valiant attempt by reinsurers not to give in too much, they have cracked, but not in all areas”. One sector where pricing remained firm was in those programmes affected by the £3bn in flood claims caused by the UK’s floods last June and July. Prices in this particular segment were up by about 5%, Willis said. Guy Carpenter said that prices were off more in the US than in Europe, with US national programmes off by about 10% and US regional programmes off by about 12%. In the UK the average decrease was 7.5%, while mainland Europe saw falls averaging 7%. Guy Carpenter said that “the collapse of the subprime market did not impact reinsurers as deeply as anticipated”. Willis Re CEO Peter Hearn said that there were signs of the reinsurance industry reverting to “its historic pattern of feast or famine”, but Guy Carpenter felt that there were “reasons to anticipate less of a boom-bust cycle in reinsurance markets” than had occurred post Hurricane Andrew in the 1990s. It claimed that the new breed of reinsurance executives were “more closely attuned to the demands of their owners and more focused on generating above-average returns to shareholders, as opposed to more traditional goals such as increasing top-line and market share”.