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France and Japan Highest Purchasers of Death & Disability Catastrophe Reinsurance

Source: Aon Benfield

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Posted on 26 Oct 2010

Aon Benfield, a premier reinsurance intermediary and capital advisor, today launches its first survey of global life insurers to understand reinsurance purchasing patterns and help benchmark retention, quantity and price of death & disability catastrophe reinsurance covers.

This enables actuaries to verify pricing calculations for alternative reinsurance pricing structures, and gives intermediaries the ammunition to place and negotiate the most effective and fair reinsurance terms and conditions. 

The survey is based on the responses of 209 life insurers from 14 countries, which buy a combined catastrophe reinsurance capacity of EUR5.9 billion.  Accounting for the respective market shares, this translates into high quality information on EUR9.0 billion of death & disability catastrophe reinsurance covers.

Key findings include:
    •    On average globally 78% of the insurance companies surveyed purchase excess of loss per event reinsurance.
    •    France and Japan purchase the most death & disability catastrophe reinsurance cover, buying total limits of EUR2.2 billion and EUR1.7 billion respectively.
    •    The average global Rate-On-Line (amount paid per unit of cover) is just below 1% and the national averages range from 0.5% in The Netherlands to 3% in Colombia.
    •    The global trend is to buy cover up to on average 44x Maximum Any One Life (MAOL) over a 5x MAOL deductible.
    •    The standard treaty allows one reinstatement costing 100% of original price in most of the studied countries.

Marc Beckers, head of Aon Benfield Analytics for EMEA, said: “Against a backdrop of more spending power from insureds, maturing markets and increasing risk, it’s crucial to grasp the evolving characteristics of the death & disability catastrophe reinsurance markets.  For most life insurers, pandemics and terrorism attacks are key drivers of purchasing and Solvency II will likely serve as a catalyst for further purchasing of death & disability catastrophe reinsurance to access efficient capital relief.”? ?Aon Benfield has surveyed the French market on death & disability catastrophe cover since 2003 and today’s first global survey has evolved to provide a broader insight. This is to reflect the global nature of reinsurance buying, that catastrophe events are likely to affect several countries at the same time, to inform insurers with multinational portfolios and compare the purchasing behaviors and prices to help influence strategic decisions.


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