From The Field: Reinsurance Renewals Look Stable

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The same pressures that are challenging group life insurers are challenging the group life reinsurers. However, despite those pressures, the group life reinsurance market remains stable.

The direct writers are looking primarily for financial strength and capacity. Some are asking for higher supplemental and voluntary coverage amounts.

Direct writers also are asking for value-added services. In addition to facultative underwriting and actuarial consulting, the direct writers are requesting services such as industry surveys and help with collecting and administering concentration-of-risk data.

The industry has made a lot of progress in tracking risk concentration since 9/11. Three years ago, few group life companies knew much about the risk they had in a particular ZIP code, let alone at a specific street address. Today many companies have this information to some degree, and it is having an effect on reinsurance coverage. Carriers with comprehensive concentration-of-risk information typically find it easier to reinsure their risk without limits. Companies with less data are finding reinsurance capacity but may see occurrence limits. Companies with poor data, or no data at all, however, are finding that there are some reinsurers unwilling to underwrite this business even with limits.

Congress is still debating the possibility of including group life insurance under the Terrorism Risk and Insurance Act. Currently, however, it appears that TRIA will have no effect on 2005 renewals.

Scott Machut is vice president of group life reinsurance and Jim Rathburn is vice president of business development on the life, accident and specialty reinsurance team at ING Re, Minneapolis, a unit of ING Groep N.V., Amsterdam. Machut can be reached at Scott.Machut@ing-re.com and Rathburn at James.Rathburn@ing-re.com.


Reproduced from National Underwriter Edition, November 18, 2004. Copyright 2004 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.