Demand for reinsurance cover in non-peak zones is likely to increase as economic growth sends insured values soaring, Hannover Re’s chairman, Ulrich Wallin, told today Insurance Day Summit London.
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And while Wallin said it is “worth the effort to examine ways to continue to write non-peak business even after the experience of the last two years, he said reinsurers will need to be “more realistic†about pricing if they are to reap the full diversification benefits of writing non-peak business.
During a keynote presentation at today’s Insurance Day Summit London, Wallin explained: “The only reason we call a territory non-peak is because the insured values in that area are comparably lower than other areas like Europe, the US or Japan, but the increasing economic development in these countries brings increasing concentration and an increase in insured values, so we will see an increase in demand for cat cover in those regions.â€
According to Wallin, spreading natural catastrophe risk into the worldwide reinsurance market is beneficial to the countries “and also the people living in those countries.
He said: “If you look at countries like New Zealand, Chile and even Thailand, the underlying premium pool available in those countries is significantly below the available cat exposure at today insurance density and if we have increased insurance density, that could even rise.
“If you look, for example, at Thailand, we have $650m premium against a loss of $12bn – it is very clear reinsurance demand will increase there and the concept of reinsurance is beneficial to those markets.
