Big global reinsurers are also warning they might pare down what risks they are prepared to cover.
from such catastrophes, in the latest example of massive pressure from reinsurers.
That excess figure has now bumped higher to $350 million, using a special “drop down” cover that will trigger a premium if used.“Global reinsurance has become more challenging over the past year due to the impact of capital markets and Australian and international natural peril events,” said chief financial officer Michelle McPherson.
The excess levels are on a gross basis, and IAG further reduces its payout exposure by using “quota share” arrangements, in which some reinsurers also take on some risk and rewards of everyday insurance cover on offer to customers. This would include “substantial rate increases whether or not the business is loss impacted”, he told an analyst call. The market was in a hardening cycle – in which pressure is on prices rising – unlike anything “observed in decades”, he said.
IAG on Monday also said two reinsurers, Munich Re and Swiss Re, had agreed to renew a quota-share deal first signed in 2018, one set to expire in June. Hannover Re had also signed a deal then but is still negotiating new terms with IAG.
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