Reinsurers positive about Australia – at a cost

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23 May 2011

Reinsurers in Europe are “positive but concerned” about risks in Australia, but they have retained their appetite for risk in this part of the world, according to Suncorp CEO Commercial Insurance Anthony Day.

“They don’t want to get out of this market, but they’ve had significant losses and it’s going to cost,” he told an ANZIIF Executive Breakfast seminar in Melbourne on Friday.

Mr Day has recently returned from discussions with the reinsurers, and says the reception they gave him was “pretty positive”.

He says fears in Australia about a possible lack of reinsurance capacity in the catastrophe market weren’t raised in his discussions, but his impression was that capacity isn’t really an issue.

“They were impressed and supportive of the degree of control Suncorp has over its portfolio,” he said. “What the reinsurers want from insurers is what insurers want from their clients – the ability to manage their risks effectively.”

CGU GM Retail Mark Searles told the forum the fact that reinsurers “tend to work on a macro basis” is a challenge for Australian insurers.

Commenting on a point by Mr Day that damage from Cyclone Yasi in the Far North Queensland town of Innisfail “was minimised in part thanks to the high quality of rebuilding work performed after Cyclone Larry in 2006”, Mr Searles said tougher catastrophe codes and new building standards “have changed the nature of many risks”.

“We need to ensure [reinsurers] are across the micro-detail,” he said. “We need to get that sort of information together and make it more realistic for them.”