Gen Re, Munich Re America Top List As 'Best Overall' Reinsurers, Cedants Say

The Kansas City, Mo.-based Flasp?hler released the complete results of its "2009 Survey Of Ceding Company Attitudes About Reinsurance" exclusively to NU.

The survey was initiated in 1993 and has been repeated every two years since. Thirty-five reinsurers and 20 lines of business were evaluated by the 696 North American property and casualty reinsurance buyers queried (representing a 39 percent response rate).

(Flasp?hler partnered with NU on a "Risk Manager Choice Award" survey assessing corporate buyer views of primary commercial insurance carriers last year. See NU's Oct. 19, 2009 edition for full results, or check it out online at www.property-casualty.com, under "NU Exclusives.")

The latest survey asked cedants to rank reinsurers on eight evaluation and selection factors. Gen Re was ranked the highest when calculating the combined ratings, coming in at 7.55 on a scale of one-to-nine, with nine being the best.

Munich Re America was a close second at 7.25, while Hannover Re came in third at 7.18, followed by PartnerRe U.S. (6.98), Lloyd's (6.86), Transatlantic Re (6.84), Swiss Re America/Broker Market (6.81) and Arch Re U.S. (6.80).

Gen Re was top-ranked on all eight evaluation categories: underwriting capabilities, financial value, financial security, client orientation, expertise and market knowledge, timely service, value-added services, and claims-handling.

Munich Re America ranked second in five of the eight categories: financial value, financial security, expertise and market knowledge, value-added services, and claims-handling.

Hannover Re finished second in the other three categories: underwriting capabilities, client orientation and timely service.

Gen Re was cited as among the best reinsurers for short-tail business by 42.7 percent of respondents, with Munich Re America placing second at 36.0 percent, and Lloyd's coming in third at 29.0 percent.

Gen Re was also far and away most often named as among the best reinsurers for facultative risks, cited by 71.5 percent of respondents, with Munich Re America a distant second at 40.9 percent.

However, Munich Re America came out on top on long-tail lines at 47.8 percent, followed closely by Gen Re at 45.4 percent, with Hannover Re third at 32.3 percent.

Meanwhile, according to Flasp?hler, "overall satisfaction with direct market reinsurers improved slightly from 42 percent saying they were 'Very Satisfied' in 2007 to 47 percent in 2009."

Flasp?hler added that "overall satisfaction with broker-market reinsurers also improved slightly, from 37 percent being 'Very Satisfied' in 2007 to 40 percent in 2009."

In addition, Flasp?hler noted, "over one-third (37 percent) indicate that relationships with reinsurers are improving. Most say that the improvement is due to better understanding of cedant business."

Financial strength was cited by 70.8 percent of respondents as the "best indication of quality in a reinsurer," compared with 52.9 percent citing "continuity of offer through the market cycle" and 52.2 percent picking "people."

Only 28.6 percent cited 'consistency of strategy," while 24.4 percent said "technical knowledge."

When asked "For what reason(s), if any, would you consider paying a higher premium to use a specific reinsurer?" about 60 percent of respondents cited a "strong existing relationship"–by far the highest response. Nearly 40 percent said "a superior rating," 38.7 percent cited a "stronger balance sheet," and nearly 35 percent said "superior service."

However, nearly one-in-five respondents (17.8 percent) said they would never pay a higher premium if they didn't have to.

In listing their reinsurance brokers, 55 percent named Guy Carpenter/Collins (Guy Carpenter completed its acquisition of John B. Collins Associates last April), while 52 percent cited Aon Benfield, and 23 percent named Willis.

Financial security (8.1 out of possible 9), along with underwriting capabilities and client orientation (both 7.9) topped buyer concerns, with claims-handling (6.9) and value-added services (5.9) less of a priority, comparatively speaking, the survey found.

Flasp?hler–which encouraged respondent feedback in a series of open-ended questions–cited the following as "a typical verbatim comment" from a cedant in summing up their priorities when doing business with a reinsurer:

"In general, reinsurers are spending the time to understand my business needs rather than being a commodity seller of capacity. We are more inclined to place business with reinsurers who take the time to understand their clients–my business–rather than those reinsurers who show up and throw up," said this respondent.

"In the end, my group's job is to sell and service a primary insurance product, not to professionally buy reinsurance," this respondent continued. "Reinsurers who understand this and respect the fact that time they spend with my group has to be productive rather than social will see a more constant stream of business opportunities."

The respondent concluded that "to be blunt, my group would rather spend time with business people, not social butterflies."

(For more feedback from respondents, see the story on page 16.)