Reinsurance Prices Fall as Risks Continue to Mount

The risks facing the reinsurance industry keep multiplying, but prices are moving in the opposite direction. At the September Rendez-Vous in Monte Carlo, major reinsurers are trying to defend their margins as abundant capital weighs on the market and insurers push for lower prices.

The industry gathering, which began on Saturday, comes as the risk landscape undergoes a profound transformation. Swiss Re describes an environment that is becoming increasingly complex and interconnected in a statement issued on Monday.

Natural catastrophes remain one of the main drivers of demand for reinsurance. Yet the growth in risk has not been enough to push premiums higher. Swiss Re says insured losses are rising by 5% to 7% a year, notably because exposures are increasing and the value of assets is climbing.

The sector is also facing risks that did not occupy the same place in earlier assessments. Swiss Re highlights the emergence of threats associated with the development of artificial intelligence, adding another layer to an already crowded risk environment. For reinsurers, the challenge is to absorb that complexity while maintaining profitability in a market supplied with capital and constrained by clients seeking better terms.