As elsewhere in Europe, however, primary motor business is hardening as combined ratios ‘well above’ 100% are being reported by some insurers.
The year-end reinsurance renewals in the Netherlands and Belgium also suggest a calm outlook for buyers of primary corporate insurance coverage.
According to reinsurance broker Guy Carpenter catastrophe reinsurance rates fell 7.5–10% in Belgium, the Netherlands and Luxembourg.
Aon Benfeld said that property renewals in the region showed a ‘modest softening’ for property catastrophe business despite an increase in demand because of Solvency II 1 in 200 year cover as well as additional aggregate protection against frequency.
The broker added that, on a risk adjusted basis, rates reduced approximately 3% for catastrophe excess of loss programmes and limits were secured ‘quite easily’ despite a series of minor natural peril events such as Xynthia, Olivia and the November floods.
Property per risk excess of loss remains ‘attractive’ to reinsurers according to Aon and most programmes benefitted from diversification as well as a ‘benign’ year for large fire losses.
The broker said that renewal terms for motor and general third party liability programmes were driven by the company statistics, which ‘varied significantly’ from one company to the other. “In general, this line is benefitting from the insurance premium increases initiated by the major insurance companies,” stated Aon Benfield.
More specifically, Aon said that in general, renewals in the Netherlands were ‘well managed’ with overall risk adjusted price reductions on property catastrophe programs of 5% on average, and ranging from 1–12%.
It said that softening continues as a result of the surplus of global catastrophe capacity, lower Dutch PML (probable maximum loss) estimates from a new AIR model, and the ‘minimum’ growth of aggregates in the Dutch market.
Aon said that overall catastrophe capacity bought by Dutch insurers fell 1%, the first reduction in years as a result of increased retentions (plus 10% on average) and reduced modelled exposures.
The broker said that a 1 in 200 year limit introduced by modelling firm RMS has ‘definitely’ become the market standard upon which average capacity is bought. “Solvency II is increasingly playing a role in setting that standard,” it noted.
“On non-catastrophe programmes, competition was healthy, mainly driven by the diversification needed by reinsurers. Nevertheless the ultimate pricing of these programmes remains more loss and exposure-based rather than market price driven. In general property renewals decreased slightly and casualty renewals remained stable year over year,” continued Aon Benfield.