After facing uncertain and worrisome times in 2008 and 2009, the global reinsurance industry has been enjoying the relative successes of the past two years. Those two years have made a major difference in the industry as new risk models were released, allowing reinsurers to judge the value of risk more accurately. While the industry is certainly experiencing a time of prosperity, there are a number of factors that are adding to concerns about the future and what can be done to mitigate disasters that may be looming on the horizon.
Last week saw the end of the 55th Annual Reinsurance Rendezvous in Monte Carlo, France. The conference attracted leaders within the reinsurance industry, many of whom were eager to celebrate the successes of the past two years. The celebrations, however, were punctuated with presentations that coupled good news with bad. Of note, one of the most concerning developments confronting the industry as a whole is that insured losses for the first half of 2011 have breached the $70 billion mark.
Adding to the troubles of the industry is the lingering prospect of a major financial crisis in Europe and the U.S. Should such a crisis manifest, the industry as a whole would likely suffer as the value of insurance would decline in both regions.
Despite the attention given to the so called “bad news” scenarios that have reinsurers biting their nails, the industry is experiencing a time of rapid expansion. This has added to the industry’s ability to manage risk, meaning that reinsurers can better handle catastrophes before, during and after they occur, which will also enable insurance companies to recover from such disasters more quickly.