Jennifer Rudden
Research Lead Financial Services & Real estate
Reinsurance - statistics & facts
Insurance for insurance companies, reinsurance is a critical component of the modern insurance industry. Today's tumultuous environment challenges traditional insurers. Continuous catastrophic events limit financing abilities, the acquisition of further expertise, and create further instability in underwriting. Reinsurance provides a level of refuge allowing risk to be spread further for traditional insurance companies.
The reinsurance industry is a complex and dynamic sector that operates on a global scale. With the continuous frequency and severity of leading catastrophic events causing billions in monetary insured losses year-on-year since 1900, reinsurers have become even more essential in the operation of the world in such uncertainty. Reinsurance companies assess risks using sophisticated modeling techniques to price their services and net premiums accurately each year. Reassessment of net and gross premiums written on an annual basis allows reinsurance firms to continue to make a profit while also remaining competitive in the market.
As the backbone of the insurance sector, reinsurance is a contract between a reinsurer and an insurer, where the ceding party transfers insured risk to the reinsurance company, reducing the risk of large payouts for claims.
Ever-evolving challenges
The reinsurance industry has faced continuous challenges including a volatile global inflation rate, rapid regulatory changes, and climate change. More recent challenges include increased cybercrime, which has led to senior executives providing opinions on levels of insurance coverage to be provided against cyber-attacks. Reinsurance companies must reassess business models on a regular basis to stay compliant with increasing industry and client needs while also remaining profitable. The capital value of the global reinsurance industry has experienced a decline since its peak in 2021. However, the industry has worked to embrace the intensifying levels of challenges.Industry players
Reinsurers have adapted by expanding into new markets and investing in technology to improve efficiency and enhance their risk management capabilities. Having faced ongoing challenges, leading players in the global reinsurance industry such as Munich Re and Hannover Re have continued to generate a positive return on equity. Notably, the top three leading reinsurance players worldwide were domiciled in Europe; However, the U.S. market was also quite significant, as the size of the U.S. reinsurance carrier market has grown year-on-year since 2011.As the backbone of the insurance sector, reinsurance is a contract between a reinsurer and an insurer, where the ceding party transfers insured risk to the reinsurance company, reducing the risk of large payouts for claims.
