Apart from a few floods happening hither and thither and resulting in minor damage, the year 2006 has turned out to be rather gentle on both insurers and reinsurers.
Unlike the forecasts of alarmist meteorologists, the hurricanes spectrum, which has devastated the Gulf of Mexico last September 2005, seems to have withered away, at least for the time being.
Neither catastrophe nor a major event is on the agenda leaving the market unperturbed.
Yet one ought to be cautious for such serenity shall not conceal the deep disagreement between insurers and reinsurers.
For Jacques Aigrin, Swiss Re's chairman, the reinsurance business is crippled by the volatility of its results. To bring this phenomenon under control, reinsurers have to maintain the market's discipline and to proceed to some rates increases.
In line with this objective, the reinsurance business is required to cut down costs and increase capital.
For the insurers, however, the slight improvement reported for the 2005 results should be accompanied by tariff cuts.
In fact, insurers have the upper hand and will end up getting some concessions.
As to reinsurers, cost reduction shall remain at the heart of their strategy for the year 2007.