Posted on 30 Jan 2009
Casualty clash reinsurance rates increased by 1.1 percent on average at the January 1, 2009 renewal, according to a briefing published Thursday by Guy Carpenter & Company, LLC on www.GCCapitalIdeas.com. Specific layers renewed at rates between -12.3 percent and 17.5 percent, based on program-specific factors such as loss history and changes to limits and retentions.
“Overall, the casualty clash reinsurance market remained relatively stable at the January 1, 2009 renewal,” said Nick Olijslager, Head of Guy Carpenter’s Casualty Clash Niche Specialty. “Though casualty clash remains a small market, we are starting to see a number of larger carriers reviving their interest in this product and beginning to secure protection, particularly those with larger net lines of business in their portfolios.”
According to the briefing, 70 percent of casualty clash programs either renewed at expiring termsor were able to secure rate decreases relative to 2008. In addition, 45 percent of programs secured rate decreases year-over-year, with another 25 percent renewing at expiring terms. Only 30 percent of programs sustained price increases at the January 1, 2009 renewal.
Other major findings from the briefing include:
• Retentions: Only six percent of renewing programs increased retentions, while 23 percent lowered them. Some carriers increased clash retentions as part of a broader trend involving other lines of business, while others did so because of loss activity. In addition, 15 percent of renewing programs moved for higher limits, while only eight percent went in the opposite direction.
• Required Capacity: With a limited number of carriers purchasing this form of coverage, capacity was sufficient and relatively unaffected by the effects of the global financial catastrophe.
• Availability: The availability of capital was increased by the participation of property catastrophe markets interested in diversifying into non-accumulating lines of business.