Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc, recently released the September 2015 edition of its Reinsurance Market Outlook report, which provides a comprehensive analysis of the key variables affecting reinsurance buyers as they approach Jan. 1 reinsurance renewals.

Reinsurance demand is projected to increase slightly in 2016 due to factors including updates to rating agency capital models, the continued privatization of reinsurable risks from government pools, and reinsurers’ expansion into new lines of business, according to the report.

In terms of business expansion, the report outlines areas of opportunity for insurers and reinsurers, including:

• U.S. mortgage risk—The transfer of credit default risk from government entities Fannie Mae and Freddie Mac to the insurance and reinsurance markets is presenting reinsurers with the opportunity to provide up to $6 billion of capacity annually for the next six to seven years.
• Annuity risk—Demand remains high for risk transfer solutions to mitigate exposures to long-term fixed, variable, equity indexed annuities, as well as other products with embedded guarantees.
• Privatization of risk—Government pools insuring catastrophe-exposed property are actively organizing depopulation programs, especially in Florida, and transferring risk on remaining catastrophe risks to the private markets.

Rating agency criteria changes