Life - Articles - More transparency needed in opaque life reinsurance market

 Nigel commented: “The lack of transparency in the prevailing market is all pervading, extending to pricing and value, where, for example, reinsurers provide ancillary services, such as underwriting advice, all as a part of the ‘package’.

 “We often see examples of reinsurers contractually ‘locking up’ an insurer for a period of years. Rarely do insurers seek quotations or ideas beyond their current reinsurer. In the non-life reinsurance world all of this would be seen as bizarre almost.”

 Writing in a Willis Wire blog, Sedgwick says that while the current dominant players want to maintain the status quo, new entrants are providing insurers with more choice, while themselves enjoying the benefits of entering a new market.

 He said: “The dominant reinsurers have built some pretty formidable ramparts and, while it is a self-serving statement, they proudly declare that the barriers to entry are too high for the competition.

 “But the evidence doesn’t support this and we are seeing ever increasing activity in the life reinsurance arena from new players.

 “The benefits to a reinsurer from writing life business are material, both in terms of profitability, stability and diversification, and given the state of the non-life market, quite compelling.”