Reinsurance

Hannover Re is positive about Africa. Jurgen Graeber, Chief Operating Officer Non-Life reinsurance of the global Hannover Reinsurance Group and Chairman of the Hannover Re Group Africa, visited South Africa, and said “We have a market with fantastic growth potential, a market that stretches from Third world to First world.” He also said that SAM is a good example of how the FSB is supporting the industry and working closer with businesses.

Emerging markets are not fully decoupled from the developed economies, so their growth is slowing, even as inflation remains elevated. Asset bubbles are forming, though unlikely to burst any time soon. Many insurers have been counting on emerging markets to support top line growth. The slowdowns in mid-2011 and asset bubble risks have revealed a potential drawback to this strategy.

Swiss Re’s latest sigma study reveals unprecedented economic losses of USD 370 billion from natural catastrophes and man-made disasters in 2011. Despite immense insured losses of USD 116 billion (a 142% increase over the previous year) arising from record earthquake and flood losses, the insurance industry weathered the year well and played a key role in risk management and post-disaster recovery financing.

Reinsurers have experienced unprecedented natural peril losses in 2010 and 2011. So, whatever plans are put in place for the 2012 renewals and years beyond, these global events will affect the South African reinsurance market for some years to come. This has already been evidenced by the July and October catastrophe reinsurance pricing which went up by between 5% and 7,5% on risk adjusted basis.

For many years the concept of the legal duty of utmost good faith or uberrim a fides has existed in the insurer-reinsurer relationship. The concept is alive and well in many jurisdictions (such as the USA…