Reinsurance rates in Canada decreasing

In its annual review of the worldwide catastrophe insurance market, Guy Carpenter & Company, LLC researchers noted 2007 reinsurance rates decreased 2%, compared to a 32% increase in 2006.The hurricanes of 2005 had no obvious impact on Canadian markets, however, as many of the reinsurers operating in Canada are branches or subsidiaries of foreign reinsurers that were severely affected by the storm losses, there was some pressure for higher rates on catastrophe business following these losses, the report says.January and July renewals in the absence of losses or increases in exposures saw reductions in the range of 5% to 10%, researchers added.Researchers examined the insurance/reinsurance industry within 23 countries in the report. Of the comments on Canada, writers noted that the claims from the three largest events (1998 Ice Storm, 1996 Quebec Flood and August 2006 Ontario Flood) pale in comparison to the claims and losses that could arise if a major earthquake and related fires struck British Columbia, or Quebec and eastern Ontario.The potential economic damage from a major seismic event in British Columbia is estimated at Cdn$30 billion, and insured losses could reach as high as Cdn$15 billion, not all of which would be reinsured, the report says.The insurance loss estimate for a major earthquake in Quebec and eastern Ontario is Cdn$5 billion. Commenting on the global market as a whole, David Spiller, CEO of Guy Carpenter, said: 2007 will be remembered as the year the catastrophe reinsurance industry righted itself, following record-setting losses in 2005 and soaring rates in 2006.He added, The industry has absorbed the changes brought about by the mid-decade catastrophes, as well as the resultant pressures from rating agencies, regulators and modelling firms.