Munich Re, SCOR pleased with January 1 renewals

Rising rates and tighter terms are putting smiles on the faces of reinsurance CEOs as they come off January 1 renewals.Munich Re Group, which saw 65% of its portfolio (worth EUR2.2 billion in premium volume in 2001) renew on January 1, says 16% of existing business was not renewed based on new, stricter underwriting controls.Of renewed business, average rate increases of 11% and increased shares of 3% were seen. New business accounted for 9% of the “New Year’s” treaties.Across lines of business, rates went up 15% in third-party liability, 7% on property, and 5% on marine business, on average. Better terms were also reached, for example with the market accepting “occurrence limits” on proportional property reinsurance for natural hazards. In the third-party liability line, Munich Re says, “in view of the steadily growing risk exposure, Munich Re sees further premium increases as inevitable in the coming rounds of renewals.” Specifically, long-tail loss lines will feel the impact of increases for some time to come. New limits on the motor insurance liability line, where unlimited cover had been offered in the past, were seen as a positive development. In marine insurance, increasing primary insurer retentions and excluding highly exposed risks were also lauded.For rival SCOR, 2003 renewals were preceded by a call for change throughout the corporation to fight off downward trending results. In the non-life treaty area, which represents about 40% of the company’s annual premiums, 77% of the portfolio was renewed on January 1. These renewals represented about 92% of the volume of business as compared with last year. There was 13% contraction in North America, 8% in Europe, and other countries held steady.In all the company cancelled 27% of renewal business, wrote 9% more new business, and saw premium increases of 8%, with a 2% change for the positive in quota shares.The company notes that it is also avoiding long-tail risks, which have fallen to 39% of it total writings for 2003, compared to 41% last year and 47% the year prior to that. It is also growing its share of non-proportional treaty business to 36% for 2003, from just 27% in 2001. The group is reducing its exposure to natural catastrophes in Europe, and tightening aggregate exposures in terrorism, legal liability and natural catastrophes.Canada was hit with 10.6% increases on average, at the high end of the spectrum, which ran between 5%-11%. By line of business, liability saw an 11.6% increase, 7.4% in motor and 6.4% in property damage including natural catastrophes.