Demand for customised reinsurance growing
Source: Middle East Insurance Review | Oct 2016
Strategic reinsurance programmes are designed to provide more efficient risk protection and can help insurers optimise their capital structure in order to improve capital returns and minimise capital costs, according to Swiss Re’s latest sigma study which highlighted there is increasing demand for customised and more strategically-motivated re/insurance solutions.
As a result, insurers are increasingly integrating reinsurance into their long-term strategy and growth plans, said Swiss Re during the release of the report, “Strategic reinsurance and insurance: the increasing trend of customised solutions”, at the annual meeting of the reinsurance industry in Monte Carlo this year. Strategic solutions are also used to manage challenging circumstances, such as M&A, changes in regulatory regimes, or market dislocations.
Insurers and large corporations have become more sophisticated in managing their capital and risks, often centralising re/insurance buying across lines of business and territories. The development has been driven by insurance industry consolidation, globalisation of risks, technological innovations, and regulatory reforms.
“This has led to higher limits and higher retentions, as well as the substitution of local contracts with larger and more complex solutions,” said Swiss Re Chief Economist Kurt Karl. “However, this goes hand-in-hand with a greater need for tailored re/insurance structures that address unique situations and can sometimes be enhanced with innovative features to meet specific client needs.”