A new report from Conning claims that despite insurers ceding more of their premium that they were ten years ago, reinsurers have not necessarily benefited because more risk is being assumed by non-traditional risk bearing entities in various forms.
Entitled 'Buyer Trends in Property-Casualty Reinsurance: A Look at US Cedants and Their Reinsurers', the Conning study reviews changing buying patterns and the use of reinsurance by cedants over the past decade. It also looks at changes in concentration of reinsurer panels and collateral mix among top US cedants along with changes in the proportion of ceded premium by major companies.
According to the study, even though insurers are retaining less risk, the traditional reinsurance model has lost out to other means of risk transfer.
"Even though insurers are ceding a larger portion of their premium, traditional reinsurers lost 20 points of market share in the past ten years, much of it to new captives,” said Steve Webersen, head of Insurance Research at Conning.
"Our analysis indicates 11 of the top 25 assuming entities were non-traditional reinsurers, either captives or government-sponsored entities, accounting for nearly 30 percent of the assumed premiums from that group. Within the traditional reinsurer group, stalwart leaders have defended their market positions, while others have not.”
"Few sectors have undergone as much change in the past decade as the reinsurance market,” added Matt Sternat, vice president, insurance research at Conning. "The lack of catastrophes, inroads from alternative capital, and changing buyer patterns have led to dramatic consolidation and change among reinsurers. Reinsurance buyer behaviour has been mixed, with concentration in reinsurer panels among larger cedants, but more diversification beyond the top 25 buyers."
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Conning, Insurance, Reinsurance, Risk, Property and casualty, US, Matt Sternat, North America