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Archive for January, 2023

Property reinsurance pricing rises by up to 20%

Posted on: January 6th, 2023 by hema kashyap No Comments

The property reinsurance pricing on loss free risk and CAT programmes in ASEAN and China varies from +15% to +20% risk adjusted, and even larger increases are seen in Taiwan and Korea, as per the”1st View Market Report” released on 1 January.

The report, outlining market conditions at key reinsurance renewal seasons—1 January, 1 April and 1 July—which are based on the real-time observations, also says that there has been an inconsistent application of deductible increases, primarily imposed on loss impacted placements.

Other findings were:
• A common feature is all peril coverage and wordings in existing hours clause have been largely maintained.
• Hardly ever, shortfall terms have been imposed on proportional and excess of loss contracts.
• Limited changes in proportional placements renewal; commissions changed by low single digits. However, there was limited additional capacity.
• Regional Retro deductibles increased substantially (mostly dropping first layers) and pricing was up across the board, however, access remained to worldwide capacity and coverage.
• Risk covers with existing CAT coverage were renewed with no additional restrictions.
• Pre-paid reinstatements shifted to paid for both risk and CAT contracts.
The January 2023 report indicates the conditions in specific markets in Asia, including:
• Loss participation clauses are now commonly in place – most triggered at 100% loss ratio with cedant participation between 30% and 50%.
• Excess of loss pricing increased and was dependent on loss record.
• Overall, deductibles remained unchanged although some cedants chose to have them increased to manage costs.

IRDAI stops publishing of ‘minimum rates’ in fire reinsurance treaties

Posted on: January 5th, 2023 by hema kashyap No Comments

The IRDAI has advised property insurers and reinsurers to stop including the burning costs rate as published by the Insurance Information Bureau (IIB) in their reinsurance treaties for fire and engineering risks. Starting April 1st, 2023, these costs are not to be embedded as “minimum rates” for risks in reinsurance treaties.

IIB rates are derived by estimating the expected losses for a policy based on previous year’s average, after taking into account claims inflation and change in exposure. As per IRDAI, such prescription by any reinsurer that effectively creates or reinstates a market (price) tariff is not according to the de-tariffed pricing regime presently and is distorting the level playing field intended to be provided by the Authority. The regulator suggests that treaty arrangements where IIB-published burning costs are taken as minimum risk rates does not reflect quality or loss history of individual risk and dissuade risk management along with the loss mitigation investments of insurance buyers.

The IRDAI has been propagating reforms in the non-life insurance sector for the ease of business for Insurers and to ensure choices for buyers/consumers of insurance and develop a free-market regime to foster sensible risk management and loss control.

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