Sandy Helps Reinsurers Resist Lower Prices, Broker Willis Says
Sandy, the October storm that battered the U.S. Northeast, is helping reinsurers maintain prices after a year in which natural-disaster costs fell, broker Willis Group Holdings Plc (WSH) said.
Prices for property-catastrophe reinsurance for Jan. 1 renewal rose 10 percent for U.S. customers with losses and were unchanged to down 5 percent on businesses without losses, the London-based broker said today in a report on its website. International rates were unchanged to down 5 percent.
Reinsurers such as Munich Re and Swiss Re Ltd. help primary carriers including Allstate Corp. (ALL) and Travelers Cos. shoulder the costliest disasters. The industry benefited this year as losses from storms, earthquakes and other catastrophes fell by half from last year’s $120 billion, even as the bill for Sandy may reach $25 billion, Willis said.
“In the absence of Superstorm Sandy, reinsurers would have found it difficult to resist buyer pressure for further concessions,” the broker said in the report. “As such, Sandy’s impact has helped to stabilize market pricing.”
This year’s reduced claims bill helped reinsurers accumulate a record $480 billion of capital by the end of June, according to a report by Aon Benfield, the largest reinsurance broker. Reinsurers and their clients renew the majority of their annual contracts in January.
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