Insurers writing in areas flooded by storm waters last August and September feared drought-like coverage conditions this June and July, as reinsurance capacity started drying up in catastrophe-prone regions months ahead of midyear renewal dates. While property-catastrophe reinsurance capacity wasn't completely depleted, it took many more trips to the pump to fill cat reinsurance tanks enlarged by a new appreciation of exposures, U.S. market experts say.
"You used to be able to get $25-to-$50 million of catastrophe capacity [from one reinsurer]," according to Rod Thaler, executive vice president and national director of Willis Re in New York. "Today, it's tough to get $5 million," he said, referring specifically to capacity available from each of the new "Class of 2005″ reinsurers in Bermuda.
The current capacity of each of the new reinsurers is 10-to-20 percent of what was available per reinsurer in 2002, he said. When multiplied by the number of reinsurers, that is "really a huge difference," he told National Underwriter.
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