With the odd combination of record catastrophe losses and a twice-in-a generation underwriting profit for primary carriers in 2005, the Jan. 1 reinsurance renewal season loomed large on the horizon with the potential for some surprises. But pretty much as expected, carriers with big Gulf Coast exposures found themselves facing some hefty premium hikes for disaster exposures, while other lines and regions were essentially flat or experienced only a moderate rise in pricing.
In contrast to 2001, when the World Trade Center terrorist attacks sent a shock wave through an already weakened industry, insurers had a few good years under their belts in 2005 that softened the triple blow of Hurricanes Katrina, Rita and Wilma, analysts noted.
In addition, new capital and alternative risk-transfer mechanisms served to keep in check any desire on the part of reinsurers to replenish their lost surplus in too rapid a fashion at the expense of either sacrificing marketshare or having their clients retain more risk, analysts observed.
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