Reinsurers resilient after 2005, IAIS says

Even though the reinsurance industry suffered major losses as a result of natural disasters in 2005, it succeeded in posting profits nevertheless, according to a new report published by the International Association of Insurance Supervisors (IAIS). “The reinsurance sector has shown considerable resilience in the face of two years of higher-than-expected natural catastrophes,” said Julian Adams, chairman of the IAIS Reinsurance Transparency Group, which produced the report. “Even so, there is still potential for under-provisioning, under-pricing, major latent casualty exposures and natural catastrophes worldwide, all of which have the potential to pose significant challenges for reinsurers’ solvency and risk management capabilities.”The reinsurance industry assumes risk from all parts of the insurance market, with risk and exposure management needing a wide focus to ensure all issues are properly understood and quantified.”The reinsurance industry has reacted to the events of last year in a number of different ways, such as: re-pricing for US catastrophe risk, reappraisal of risk management tools and how they are used by reinsurers, and an increase in the capital markets’ appetite for (re)insurance risk and a greater focus on the benefit of diversification.The IAIS sets international standards for insurance supervision. This is the third report it has published on reinsurance transparency.The Global Reinsurance Market Report 2006 is available at: www.iaisweb.org.