While direct writers feel that relationships with reinsurers are improving, there is still a pretty wide difference of opinion over how well reinsurers understand what direct writers want, according to a new 2007 poll developed by Flaspohler Research Group.
The survey of 588 cedents found that 29.2% of those surveyed believe relations with reinsurers are improving, compared with 5% in 2005, when the last survey was conducted. About 60% of these respondents either make or strongly influence the final ceding decision, according to the survey.
Additionally, 80% of reinsurers responded that they understand what direct writers need, but only 33% of direct writers concurred.
“The big message is that the hardest work has been done. Communication has started,” says Rick Flaspohler, president of Flaspohler Group, Kansas City, Mo. “But there is still work to be done. The biggest pitfall is that reinsurers will stop listening to direct writers.”
The survey found that since 1995, the “very satisfied” response of reinsurers dropped from 67% to a low of 14.9% in 2005, but has edged up to 17.4% in 2007. While Flaspohler says the upward move could be a good sign, he also notes that statistically, it is not a significant change.
The poll is conducted every other year to get a sense of what it is that insurers and reinsurers want. It is co-sponsored by Canada Life Re; Gen Re; Generali USA; Hannover Life Re; MARC; Optimum Re; RGA; Swiss Re; Transamerica Re; Wilton Re; and XL Re Life America.
The survey found that 17.6% of ceding companies said they would place between 20%-30% of total life reinsurance ceded with one reinsurance group; 18.7% said 30%-40%; and 12.7% said 40%-50%.
The percentage of direct writers who would place more than 50% of reinsurance ceded with one reinsurer is considerably lower. The total drops to 8.8% in the 50%-60% range; and continues its decline to 1.3% for the 80%-90% range. However, in the 90-100% range, it ticks up to 6.8%.