Reinsurance: Baden-Baden and Beyond

Baden Baden Reinsurance Conference

What was clear at the recent Baden-Baden Meeting is that the agenda hasn’t changed since I blogged about Monte Carlo – the two big issues for the reinsurance industry in the run-up to 1/1 renewals are still Contingent Business Interruption (CBI) and the impact of catastrophe model changes.

I spoke to WillisWire Editor, Ingrid Booth, about these and other themes in a video interview in London a few weeks ago.

While we all breathed a collective sigh of relief following a largely uneventful US hurricane season, the catastrophic floods in Thailand, which some market commentators are saying could be the “costliest in a decade”, brought the problem of CBI to the fore again.

As with the CBI questions raised by the devastating Tohoku quake and tsunami, only time will tell what the true business interruption costs are and these could take six to nine months to materialize. Uncertainty is not something that we as an industry deal well with and reinsurers need to find ways to get a better handle on their supply chain risks.

On the topic of the RMS model changes in Europe, I expect that the impact will be fairly muted at the January 1 renewals as reinsurers are still digesting what the changes will mean for their portfolios.

The ongoing European debt problems are likely to have limited impact on reinsurers’ investment portfolios which are generally conservative, however the overall business environment that the crisis is creating could hamper future growth of the reinsurance market.

I welcome any comments on this post and would be interested in hearing which of the three issues – CBI, model changes or the European debt crisis – you think is the biggest one facing reinsurers and why?

About James Vickers

James is the Chairman of Willis Re International & Specialty, where he is responsible for strategy and senior c…
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