The continuing influx of third party capital into the reinsurance market is a major benefit for mutual insurers, according to Robin Swindell, EVP of Willis Re.
Mutual insurers are often heavily reliant on reinsurance to provide them with additional capital to deal with catastrophes and large losses, so an abundance of capacity has created favourable reinsurance buying conditions for mutuals, according to Swindell.
He said “The cost of property catastrophe reinsurance is falling, and well-managed renewal negotiations have the potential to make this an immediate and easily quantifiable benefit. Increasing competition amongst reinsurers also provides incentives for them to be more flexible about contract conditions. This provides a valuable opportunity for a mutual to incorporate the flexibility within their reinsurance arrangements to address the coverage needs of members, and close any gaps that have arisen between the reinsurance and original policies.”
Less tangible are the benefits of greater choice: today there is a wider and ever increasing range of reinsurance providers available. Within this vibrant reinsurance market, however, it may well be easier to find reinsurance partners who recognise the unique characteristics of mutuals, and give credit for them, according to Swindell.
He added “As the 1st January renewal season approaches, we will certainly be pointing out to our mutual clients that now is the time to try to benefit from these changes, and reminding reinsurers that they should consider and treat mutuals as preferred customers.”
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