Canadian reinsurance market sees continued softening in Jan. 1 renewals

Canada experienced a significant reduction in reinsurance capacity secured during Jan. 1, 2011 renewals because of a continued movement from proportional reinsurance to excess-of-loss treaties, mergers and acquisitions and increased retentions, reported Aon.These factors set the stage for a competitive domestic reinsurance market with excess capacity available to deploy, despite the fact that Canada experienced its second-largest catastrophe loss in history in 2010, Aon said in its 2011 Reinsurance Market Outlook report.”Although reinsurers tried to maintain pricing discipline, the market supported single-digit reductions in catastrophe prices on a risk-adjusted basis for loss-free layers and programs,” the report says.The report also found:

• following two significant loss years, property per risk covers saw a stable renewal after a benign 2010;
• proportional treaties generally saw a modest softening; and
• casualty and specialty programs experienced a relatively stable renewal with respect to both price and coverage. Reinsurers pushed (ultimately unsuccessfully) for additional rate on programs with Ontario auto exposure.