The Importance of Catastrophe Reinsurance
While most Property and Casualty Insurers would not contemplate forgoing the purchase of Catastrophe Reinsurance, many Life and Health Insurers choose to retain the catastrophe risk embedded in their insurance portfolio.
The reason for this is that many companies consider this risk too “remote” or the cost prohibitive. Also, the purchase of this reinsurance does not allow the insurer reserve credit in most jurisdictions.
Despite this, the risks that Life and Health Insurers are facing continue to increase annually. In the past, the most important reason to purchase this coverage was to protect against natural catastrophes such as Earthquake and Tsunami. However, in recent history terrorism risk has grown substantially as evidenced by the tragic events of September 11, 2001. While a repeat catastrophe of the magnitude of 9/11 has thankfully not been experienced, the risk of terrorism and its worldwide scope has not subsided and in fact is increasing day by day.
Another reason an insurer may want to reconsider their decision to purchase catastrophe reinsurance is the cost of this protection and its steady decrease since 9/11. Additionally, the scope of the coverage has widened, resulting in comprehensive coverage at a favourable cost.
Catastrophe Reinsurance for Life and Health and/or Personal Accident insurers is available through Sutton Reinsurance. A leader in this specialized area for the past 11 years, Sutton Re can offer highly rated reinsurance security through our full binding authorities at Lloyd’s of London and the technical expertise necessary to analyze and price this risk appropriately.
Sutton has a 37 year history with Lloyd’s, the world’s leading insurance and reinsurance marketplace, and is the longest serving Accident and Health coverholder in Canada. Lloyd’s recently announced outstanding annual results for 2014 and reaffirmed their financial ratings of A+ with Standard & Poor’s, A with A.M. Best and upgraded to AA- with Fitch.