The trend is, rather, toward the reduction of prices in most classes of business. However, some disparities among markets as well as targeted increases in some countries are noticed. In fact the talks held in January 2010 have taken into account a balanced supply-demand system in the United States as well as in Europe.
The American market
In the United States, tariffs shrank by 6% for natural catastrophes and by 10% for property insurance. Motor has reported, however, a stable trend.
The European market
Renewal conditions have been firmer in Europe due to the rise of the loss experience in 2009. Yet, reinsurance tariffs could only follow the general trend reporting decreases in some classes of business.
As to natural catastrophes, decreases have amounted to 10%. They reached 5 to 10% in the United Kingdom and an average 5% in continental Europe. Only French and Austrian markets reported significant tariff increases. In France, some reinsurance programs have posted increases of about 10%. This reinsurance price rise is accounted for by the high loss experience triggered by storm Klaus which cost insurers 3.5 billion USD.
More substantial surcharges, between 20% and 30% have been noticed on the Austrian market, crippled by considerable hail storms during the recent four years.
Unlike cross-Atlantic markets, the European motor market, whose loss experience has been worsened in 2009, has witnessed a tariff increase amounting to 10%.
However, in Europe, commercial and industrial risks have benefited from soft underwriting conditions.
In Europe as well as in the United States, some aviation rates have reported significant rises while the decrease in the marine class of business is estimated at 5%, with especially substantial increases in capacities.
The African market
The decrease of the premium volume makes reinsurers worry. The slowdown of economic activities has resulted in a decrease of the marine cargo premiums and a stagnation of construction-related risks.
Quite often, insurers have benefited from the competition between the reinsurers in order to obtain advantageous renewal conditions. Despite an extremely difficult framework, some reinsurers managed, nonetheless, to impose some tariff increases especially with ceding companies sustaining a high loss experience.
The Middle Eastern market
The 'business as usual' formula is the concern. It translates into one single word: decrease. Neither the international crisis, nor Dubai's hardships have managed to reverse the market's downward trend. The rate of property risks has reached decreases of unprecedented levels. Competition among insurers and the overcapacity of reinsurers have weighed down the 2010 renewal conditions.
The reasons behind such a trend reverse
This general moderation of reinsurance rates is accounted for by:
a mild cyclonic season in the Atlantic (Gulf of Mexico and the Caribbean). The economic losses related to natural catastrophes remained relatively low in comparison with 2008. These losses dwindled from 200 billion USD in 2008 down to 50 billion USD in 2009, while insurers' losses amounted to 22 billion USD in 2009 compared to 50 billion USD in 2008- the reinsurers' excellent performance in 2009
- the reinsurers' tough resistance to the financial crisis from which they came out with abundant funds and a large capacity
- a decline in reinsurance demand
The combination of such factors has generated more capacities on the market as well as an excess of competition among reinsurers.