Insurers are resisting rate hikes from their insurers, including the property reinsurers that act as a safety net if insurance companies’ losses reach a certain level.
Why it matters: Reinsurers, which in the past have bid up rates as insurers accumulated more losses than expected, are competing more with alternative capital.
What’s new: Endowments and pension funds are increasingly putting money into catastrophe bonds, a vehicle that raises money for insurance companies — giving insurers other options to turn to in the event they need help paying out claims.
- What they’re saying: “The reinsurance pricing environment, in a word, has been frustrating,” Brian Young, CEO of reinsurer Odyssey Group, said at a recent industry conference.
Go deeper: U.S. insurance industry under growing pressure to exit fossil fuels