Large insurance companies could be reaching a tipping point that sees them reverse the recent trend of retaining more risk and actually step back into the reinsurance market to buy more cover.
The contrarian view comes from TigerRisk CEO Rod Fox, who told The Insurance Insider that he is beginning to see early signs of a change in approach from reinsurance buyers at the biggest carriers. “I think we’re reaching that point.
Everything moves in cycles and I believe that you’re actually going to see more smart reinsurance purchased going forward rather than less,” he said. Insurance companies have been making a steady retreat from the reinsurance market over the last few years, starting in the casualty sector.
This movement has gathered pace recently as several buyers have undertaken wholesale consolidation of their outwards treaties and reinsurer panels. The trend has been driven by a desire to gain efficiencies by centralizing the process of buying reinsurance as well as a willingness to retain more underlying business that has been achieving rate improvements over the last three to four years.