More global life insurers are buying catastrophe reinsurance products ahead of the introduction of Solvency II, Aon has claimed
Its Life catastrophe benchmarking study 2013, published yesterday, survey 290 life insurers across 17 countries in Europe, China, Canada and Japan. Between them, these insurers bought a combined catastrophe reinsurance capacity of 7.5bn in terms of XL per-event treaties. This covers losses above the insurer's retention for all the individual risks within a particular account.
The proportion of companies buying life catastrophe protections increased from 78% in 2011 to 83% in 2013, the survey said.
And the capacity purchased in Europe for XL per-event has grown steadily since 2010, hitting a value of 6.6bn in 2013.
Aon actuary Anne-Lise Bagur said: 'Our study shows that the current capacity in XL per-event cover equates to at 6.6bn in Europe - an increase of 17% since we started the study four years ago.'
She said the figure reflected how the number of companies not taking out reinsurance had decreased from 22% in 2011 to 17% in 2013.
'We believe Solvency II is the main driver of the increase in reinsurance purchase in Europe, as companies prepare for the forthcoming regulation by buying reinsurance to reduce capital requirements,' added Bagur.
Aon said the survey would help actuaries verify prices for alternative reinsurance structures and provide insights into purchasing patterns and help with benchmark retentions, quality and price.
The largest purchasers of capacity per event in terms of number of lives covered are Turkey and Israel, mainly due to their exposure to earthquake and terrorism. The earthquake and tsunami that occurred in March 2011 impacted the Japanese market with a 10% increase in rate on line (ROL), the percentage of premium paid for the unit of cover.
Apart from the Japanese hike and a 13% decrease found in Finland global ROLs have remained stable since 2010 in the studied countries, Aon said.
