By Rosemary Onuoha
Primary insurers ceded about $260 billion to the global reinsurance markets in 2018, representing five percent of direct premiums written for the year.
Swiss Re Institute disclosed this in a report which indicated that $200 billion of the amount ceded were from non-life premiums, which had a higher cession rate of around 8.4 percent.
In contrast, only around two percent of life premiums were ceded to reinsurers, representing about $60 billion.
Swiss Re attributed the difference to the dominance of savings premiums in life, which are typically not reinsured.
The report stated, “In non-life, cession rates among emerging regions – particularly emerging Asia (excluding China), the Middle East, Africa and Latin America – are higher than overall, indicating that these countries are of higher importance in the reinsurance sector than in the primary industry.
“The U.S and Canada continue to dominate the markets in reinsurance, representing a third of the global premiums ceded in non-life and 53 percent in life, although cession rates were found to vary considerably by line of business.
“For example, cession rates in motor are very low at around four percent, but much high in property (16%), liability (14%), and special lines such as aviation, marine or engineering (over 30%).”
Swiss Re believes that the reinsurance sector is better positioned with respect to some of the major vulnerabilities facing primary insurers.