Reinsurance capacity “not nearly enough”: RAA

The Reinsurance Association of America (RAA) publicly endorsed the Terrorism Risk Insurance report issued by the President’s Working Group (PWG) on Financial Markets.

The report looks at market dynamics in the private terrorism insurance markets.

The RAA said the report builds on the numerous important databases in both the public and private sectors addressing the insurability of terrorism risk.

With respect to the study’s comment on the long-term availability and affordability of reinsurance, the RAA believes certain key statements require a different perspective.

For example, the PWG report referenced reinsurance capacity growth since 2001. According to the PWG, which cited the RAA as its source, reinsurance market capacity was at “zero” following Sept. 11, 2001. It increased to US$4-6 billion before the extension of Terrorism Risk Insurance Act (TRIA) in 2005 and now stands at US$6-8 billion in 2006. “Technically there has been an increase, but far short of the industry deductible (US$36 billion)” the RAA said in a statement. “Reinsurance capacity has gone from zero to ‘not very much,’ to ‘not nearly enough.'”