
Asia-Pac disasters to propel property catastrophe reinsurance premiums up
Expect tighter terms and conditions as well as international reinsurers attempt to claw back some of the losses.
Higher premiums are forecast even as Standard & Poor's Ratings Services said it believes the impact of the series of natural disasters between September 2010 and June 2011 on reinsurers' overall financial profiles can be managed.
Standard & Poor's noted, “Underwriting results for a number of global reinsurers with operations in Asia-Pacific were hit by the disasters, which included an earthquake and tsunami in Japan, two major earthquakes in New Zealand, and floods and a cyclone in Australia. However, outside Japan, regional domiciled rated reinsurers have limited or manageable exposure to the region's catastrophe events as they write mostly domestic business.”
According to information from AIR Worldwide, insured claims from the said Asia-Pacific events could amount to as much as $51 billion. “Prospectively, we could see higher property catastrophe reinsurance premiums and tighter terms and conditions--especially in Japan, Australia, and New Zealand--as international reinsurers attempt to claw back some of the losses,” said Standard & Poor's.
Meanwhile reinsurance pricing in the rest of Asia (outside Japan) is said to be uncertain, “reflecting the counteracting effects of shrinking global reinsurance capacity and the competitive but rapid growth of primary insurance in the region.” Standard & Poor's noted that soft reinsurance pricing is likely to continue in some parts of Asia markets, especially in markets not prone to catastrophes, such as Singapore, Malaysia, and Thailand.