For the global reinsurance industry, this year's Monte-Carlo Rendez-Vous feels more like one in 2007 than that in 2009, Henry Keeling, president and CEO of Guy Carpenter's international operations shared with the audience at today's press event. The reason for this mental time travel is very simple: reinsurance capital seems to have recovered from the crisis and demonstrated some growth - mainly due to unrealized gains.
Now reinsurers have to look for ways to make the excess capital productive. Share buyback programs at full swing in a number of companies and dividend payments "don't create profitable growth", Keeling opined. Guy Carpenter advises the industry to focus on emerging risks and markets, and invest in new technologies.
Guy Carpenter itself has started to look into Asian specialty risks (not a too large segment of the regional market) and into... microinsurance. Actually, it seems to be the first time heavyweights like Guy Carpenter are seriously speaking about microinsurance at such a global industry event as Rendez-Vous... This surprising move may indicate that when it comes to new risks and markets, reinsurers don't seem to have many lavish choices - or maybe we are wrong. After all, according to Guy Carpenter's estimations, the current volume of the global microinsurance industry is around US$1 billion and it has the potential to reach US$5 trillion some day. Too bad, the experts didn't indicate when exactly the day will come.
Speaking about industry surprises - reinsurance prices don't seem to grow. "And they will continue to stay at a low level absent major loss events", Christopher Klein, global head of reinsurance, predicted - and not just any major loss event. Indeed, over the first half of the year, we have seen quite a lot of catastrophes, both natural and man-made: starting from the Haiti earthquake to the Deepwater Horizon drama. And yet the rates continue the downward trend - or, at best stay flat. Rapid rate hikes will be possible after a surprise, ground-breaking loss event, something like 9/11, Klein stated.
Incidentally, today is the 9th anniversary of 9/11. They say in 2001, when the news spread about the attack, Rendez-Vous de Septembre suddently stopped being a vanity fair.
Microinsurance is the inheritance of even the poor, but very beggar. Can I understand that such a rosy forecast of growth for microinsurance means the expectation of the impoverishment of the Earth’s population? What does "Guys" said about this?
ReplyDeleteNothing :). I hope I haven't given the correct figures... because US$5 trillion is really a lot. Presumably, GC believes the growth will be achieved thanks to high birth rates in third world countries.
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