Taking the Sting Out of Catastrophes


In addition to serving as a buffer for big losses and providing capacity to expand availability of coverage, reinsurers serve as a first responder to changes in exposure and the marketplace.


“One of the dangers when you look at profitability, at least in marine, is you could inaccurately portray a certain class of business as profitable if you didn’t look at the reinsurance events that have taken some of the loss sting out.”


Robert Huffert, Munich Re America


When a reinsurer experiences losses that are particularly large and unexpected, it will hunker down to examine changes that may be influencing the exposure in order to adequately price it. This requires getting very close to the risk and sharing with clients information gleaned from sophisticated models to understand exposure, loss development and trend factors. This is where we are now, as the unprofitability in the market today cannot be sustained.


Copyright © 2011 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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