Reinsurers failing to finance peak risks effectively

Reinsurance industry stakeholders need to focus on more than just rate movements, Frank Majors, managing principal at Nephilia Capital Ltd., told delegates of Guy Carpenter’s Baden-Baden Reinsurance Symposium.”Predicting price movement ignores more important questions,” a Guy Carpenter release quoted him as saying. “First, irrespective of what is happening, is the return we expect to generate sufficient for our capital base?” Currently the answer appears to be ‘yes,’ but each organization will have to answer based on its respective business model, Majors says.”Secondly, is the demand for risk financing being met efficiently?” he asked. “We don’t think so. The reinsurance industry handles many risks very well, but we see much unfulfilled demand, suggesting the industry’s basic business model is not financing peak risks very effectively.”