Industry Analysis & Industry Trends
The Global Reinsurance Carriers industry, which provides support to direct insurance markets all over the world, has suffered over the past five years. This will cap off a slow growth period characterized by low-interest rates, a prolonged soft insurance market and severe currency headwinds for many global reinsurers. Nevertheless, the industry is projected to return to more robust growth over the next five years, particularly in emerging markets.In addition, global demand for reinsurance is growing, as more direct insurers look to shore up their capital positions before taking on more business. Furthermore, renewed commitment to higher interest rates in the United States are set to benefit the investment income garnered by reinsurers.
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Starting a New Business
Regulations for reinsurance tend not to be as high as for primary insurance industries. Reinsurers normally have to apply for an operating license in each of the countries they seek to operate. Gaining a license generally requires reinsurers to demonstrate a solid operating record, healthy balance sheet and excess surplus to suffice all ordinary contingencies in addition to minimum capital requirements. In establishing operations, reinsurers must also submit regular performance reports and continue to conform to minimum capital and solvency standards.
The need to meet minimum capital requirements imposes substantial start-up costs on reinsurers. This presents another major hurdle for entry into the industry... read more