As a part of the vertical layering of risk and sharing of losses, reinsurance is naturally playing an important role in this increasing need for a buffer layer, according to James Drinkwater, president of AmWINS Brokerage.
Placing risk with reinsurers allows primary players to write more business with higher limits because potential losses are shared. So when reinsurance is relatively cheap, it means demand for any buffer layers is greatly diminished as the points between where primary limits end and excess limits begin bump up against each other.
However, Drinkwater notes, with the cost of reinsurance starting to become more expensive, primary insurers have looked to reduce policy limits—restructuring the spread of risk and contributing to the gap between primary and excess layers.
Continue Reading for Free
Register and gain access to:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
