Ecclesia Group Ecclesia Re

A look at the insurance market - reinsurance business

Obtaining the necessary insurance cover at acceptable prices is increasingly becoming a challenge for customers. Especially at the moment, insurers and reinsurers are positioning themselves as less and less solution-orientated in terms of the policyholder in traditional risk transfer.

Alternative risk transfer

Traditional risk transfer solutions are increasingly reaching their limits. An ever greater dependence of the primary insurance market on the reinsurance market, driven by claims trends and capital requirements, means that market cycles and underwriting behaviour are almost congruent. In addition, the signs continue to point to a shortage of reinsurance for reinsurers, known as retro, because rising interest rates are making alternative and quite safe investment options attractive again. This is a phenomenon that is further jeopardising the situation regarding capacity and adequate risk protection.

In order to stay in control in this environment, customers should explore alternative paths, shed the dependency implied by the term "policyholder" and proactively take the management of their own risks into their own hands.

Changes in the insurance landscape from a reinsurance perspective

Rising claims costs (natural disasters and climate crisis, pandemic, sanctions), risk premiums due to the changing risk landscape (deglobalisation as a result of political crises, decarbonisation, etc.) have increased the need for premiums. In addition, pragmatic and quick solutions for current market participants outside of the primary insurers' existing treaty solutions are being made more difficult by further increases in regulatory capital requirements. As a result, traditional insurance solutions are often no longer sufficient to adequately cover specific risks, especially if a risk balance in the group is only severely limited or completely excluded. An analysis of traditional insurance solutions shows that the insurer often has less than 40 per cent of the premium available for genuine risk transfer after deduction of all costs in order to finance the risk and the associated potential losses and to purchase affordable self-protection in the form of reinsurance.

These factors are increasingly leading policyholders to rethink their approach to innovative or alternative risk financing. Among other things, the idea of balance sheet protection/company value is being emphasised rather than the traditional risk- and property-based view.