Reinsurance in the UK consists of written premium, reinsurance ceded and reinsurance policies. The major factors affecting the reinsurance in the UK are the country’s economy, demographics, natural hazards, man-made hazards and their impact on the insurance industry. In the year 2017 March, the terrorism reinsurance fund Pool Re has announced plans to extend its cover to risks related to cyber-attacks on property. The non-profit flood reinsurance fund, Flood Re, is active. With the growth of cyber-risk and telematics, demand for bulk annuity reinsurance contracts and implementation of Solvency II in UK are expected to support the growth of reinsurance segment over the coming years.
It was observed that the global reinsurance market has faced losses due to rise in natural disasters in the yesteryears. The global reinsurers sector has extremely strong capital adequacy and will continue to provide support but few reinsurers are more exposed and sensitive to risk.
Even though the prices are continuing to lower across all lines of business and global property prices were low during renewals, the reinsurance sector has faced losses. The exposure to catastrophe risk is an additional pressure point on reinsurance profitability, and reinsures are overexposed who might see deterioration of their insurance over the time.
According to the research report “Reinsurance in the UK, Key Trends …rtunities to 2020“, it was observed that the reinsurance capital is growing from the past years and will witness a strong growth over the coming years. There is an overall demand for reinsurance industry, but the growth is limited to only few regions and lines of business.
With the new rules and regulations in the reinsurance sector the consumers are looking forward for new insurances. Consumers are encouraging new investments in innovative insurer technologies in both organic and inorganic forms.
However, macro catastrophe loss impacts on the reinsurance market is combine with higher contribution in loss activity from perils like severe convective storm, flood, and fire that typically result in lower ceded losses. The increase in the potential interest rate could indicate potential capacity restrictions in the reinsurance sector.
The global reinsurance market status and outlook clearly defines the angles of players, regions, product and end application/industries. The global leading reinsurance players are divided based on the reinsurance market by product and application.
Asia-Pacific occupies the major share of the reinsurance market over the coming years with China leading followed by India and Southeast Asia regions. The leading reinsurance competitors in global market are Munich Re, Swiss Re-insurance Company, Hannover Re, SCOR, Reinsurance Group of America, XL Group Plc, PartnerRe Ltd., Everest Reinsurance (Bermuda), Ltd.
, Catlin Group Limited, Korean Reinsurance Co, Berkshire Hathaway Cooperation, Lloyd’s of London, HDI-Gerling, AXA, and Allianz, China Reinsurance Company.
Retrocession is a process of one reinsurance company serving another company by providing services. This is carried out by accepting business that the other organization had agreed to.
It was observed that in UK there is a high reliance on retrocession in the past years that has clearly contributed to a decline in the reinsurance market in the UK. Reinsures are expected to avoid the property catastrophe business in the next few years.
These are the major factors affecting the reinsurance market and will also help in creating new opportunities in the reinsurance sector in the future.
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