Reinsurance Trade Group Or Cartel?

The Global Reinsurance Forum reached it’s first anniversary in September of this year. Launched by 10 major reinsurers, the forum’s aim is to be a lobby group that’s goal is to shape international regulatory and policy issues.

Though vigorously defended, this forum has been alleged to be little more than a cartel. Members of the GRF say that the forum’s first year has made great progress by promoting the role of reinsurance as a sort of financial shock absorber to both regulators and politicians.

Traditionally, Bermuda and London have always been hubs but new sites such as Zurich and Dublin have challenged their premier positions. Some have even dubbed Zurich as “the new Bermuda.”

There does seem to be agreement that Bermuda at least will remain a key reinsurance center, even though there have been a few defectors. Bermuda’s status, however, will depend on no major deterioration of it’s favorable political and tax environments.

London’s insurance market leaders realize that London must also do more to accentuate it’s strengths. While the London insurance market leaders have more clarity on the goals and how to achieve them, they have not yet reached the efficiency that it will take to hold off the new contenders.

Whether current reinsurance pricing levels are still adequate is a question that has caused differences in opinions even within the forum. Some industry giants take the position that they are not. Others in the big ten believe the industry is just fooling itself.

Information taken from the November 2010 issue of Risk and Insurance Magazine.