Life Insurers See Little Change In The Way They Use Reinsurance
In the aftermath of the Sept. 11 terrorist attacks on the World Trade Center, life insurance companies say the incident will not have much of an impact on their existing reinsurance programs.
There are no planned changes to current underwriting and reinsurance arrangements, says Bob Picarello, general counsel with Lincoln Financial Group in Hartford, Conn.
The reason, he adds, is that there is limited use of the war exclusion clause in some contracts.
Lincoln uses a reinsurance pool that counts seven reinsurers among its participants as well as individual arrangements for its life insurance products, Picarello says.
Met Life in New York “uses very little reinsurance” for its life insurance policies and currently does not anticipate reevaluating its position, according to spokeswoman Holly Sheffer.
Prudential Financial in Newark, N.J., will continue to operate its reinsurance program as it has in the past, says spokeswoman Mary Flowers.
The company engages in an “active risk management program,” according to Flowers. For its domestic life and group life business, Prudential uses yearly renewable term reinsurance as well as catastrophe coverage, she says.
Yearly renewable term shifts the risk but not the reserves of a block of business to the reinsurer.
Additionally, Flowers says “high quality counterparties” are used when reinsurance treaties are created.
Prudential also reevaluates its reinsurance programs at least once a year and usually more often, she adds.
New York Life Insurance Company has several sources of reinsurance and does not focus on one supplier, says William Werfelman, a company spokesman. However, he says it is too early to say whether reinsurers will reevaluate policies of high net worth individuals and exclude coverage for terrorism going forward.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 15, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.