In addition to raising capacity and lowering reinsurance prices, the influx of new capacity from the capital markets is driving more flexible reinsurance terms and efficiencies that primary insurers and their brokers have been seeking for years.

Executive Summary

TigerRisk's Mike Schnur explains how a carrier can benefit from a reinsurance buying strategy that consolidates multiple reinsurance towers into one contract, and why reinsurers are willing to sign onto such contracts now even though they've resisted such moves in the past.

Multiyear programs, once a rarity, are now becoming commonplace, and private placements with bespoke terms and conditions that address specific client needs are gaining traction.

Another trend being ushered in by the flood of new money is the shift of reinsurance buyers to consolidate multiple reinsurance towers into one contract.

Insurers have long complained that the use of multiple towers instead of just one is inefficient and results in a poor return on their investment. For example, an insurer may buy separate programs for individual regions with each program having its own limit. In a portfolio of five programs, the chances of making a reinsurance recovery is lower than when consolidating all of the programs into one.

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