Summary
It is understandable that the re-insurance market has gone into another furor over real and potential future losses. What is unique about this particular time period, is that this furor has created a shortage of risk takers, less overall capacity and enormous rate increases for California Earthquake coverage, a totally unrelated source of potential claims. Increases of 100% for renewals are not uncommon, and many property owners searching for coverage are being turned away at the inn. Word has come at last that more players are entering the marketplace, sensing an opportunity for significant profit due to the rate increases. These increases have nothing to do with increased risk or exposure, but are caused by shortage of the ultimate "supply" of coverage.
Analysis
These facts were learned by negotiating for earthquake insurance over the last 12 month period. Hopefully the industry will not experience the "usual cycle", since financial reporting is much more "real time" than in previous decades. Profit seekers will enter the markets that are experiencing reduced capacity, and will quickly see rates driven down by increased availability of coverage.
