NU Online News Service, April 9, 3:04 p.m. – Life reinsurers are looking for new opportunities because of fears that life insurance cession rates will level off, according to Jim Senn, president of the individual life and health operations at ING Re, Denver.
The cession rate is the percentage of contracts that insurers cede to reinsurers.
Life cession rates, now in the 60% range, will probably increase industry-wide, to the mid-70% range, before plateauing, Senn predicted today in an interview.
The possibility that cession rates will stabilize and the current life reinsurance capacity glut are encouraging the development of new markets, such as reinsurance for critical illness policies and reinsurance for products sold to consumers aged 60 to 75, Senn said.
The critical illness reinsurance market and the reinsurance market for products aimed at older consumers are still small, but ING Re, an affiliate of the ING Groep N.V., is one of the companies placing more emphasis on those areas, Senn reported.
Of course, how reinsurers approach markets in the future will depend on attitudes toward risk assessment, including risk concentration issues. Early indications suggest that the Sept. 11, 2001, attacks added the equivalent of an extra month of claims to the 2001 individual life reinsurance results, Senn noted.