Cat Reinsurance Prices Drop Slowly

It’s nice to see some sanity returning to cat treaty pricing (assuming no mega-catastrophes), especially as those of us at primary insurers head into “planning season”.  Quoting Business Insurance:

Catastrophe reinsurance rates have dropped an average of 10% in 2008 compared with a 6% decline in 2007, according to a report released Monday by Guy Carpenter & Co. L.L.C.

It’s mentioned in that article and at a few other sources that, to the extent that reinsurance costs still seem high, part of that is conservatism imposed by backlash from the ongoing credit crunch.   While the industry is comfortable with the amount of capital available to cover most mega-cats, reinsurers are understandably concerned with what might happen if they needed to recapitalize after such an event.