21 March 2023 4 min read

📺 Masterclass | The History of Reinsurance - 1/6

Patrick's Masterclass - Video n°1 (French & English subtitles avalaible directly on YouTube)

Hi everybody 👋


I am Patrick for the youngest who may not know me.


10 th of March 1975, was the very day when I joined the (re)insurance industry


Today, I am on the verge of retiring after 47 years working with passion


Tomorrow, what kind of future for this industry? Let me try a guess. From Past memories to Future guesstimates overlooking today’s assessment, this will be our story over 6 tutorials.


Let’s start! 


  • 1975 : was the privilege of so called “developed countries”: USA half of the world premium ahead of Japan, few European markets, Australia and Canada, Africa, Middle East, India, Latam, communist countries were not or hardly insured

  • 2021 : The “shift to East “, of our world appears clearly: China 2nd world ranking, India n° 10 (n°20 in 1975), behind South Korea n°7th.

  • 2030 : The shift to East will continue along with the economic development of this area. The “Rest of the world” entity that is Africa, other Asian countries, Middle East, Latam will increase its market share according to increased population, insurance penetration and economic weight.

Insurance vs Reinsurance

2020 : World Insurance Premium : 6 287 Bns $, but World Reinsurance Premium : 320 Bns $ about 5% of worldwide insurance premium. (Life and Non-life)


Reinsurance as a % of the global insurance premium had reduced gradually over the years

  • The number of small players with important reinsurance needs has strongly declined
  • Large Groups have started to look at their reinsurance needs on a global basis, reducing year by year by hundreds of Mios the reinsurance volume ceded
  • Prices have decreased regularly in view of overcapacity available
  • Life reinsurance premium was marginal

Today this downwards trend is over: reinsurance premium is back to growth, due to:

  • An increased risk adverse attitude of large insurance companies who want to reduce the volatility of their results impaired by loss frequency and squeezed margin on direct pricing. Large Quota share are ceded even more when attractive commissions can be achieved considering the premium appetite of some reinsurers
  • Strict Solvency requirements: fast growing lines of business (Agro, Health) and their volatility, reserves needs: this leads as well to high proportional reinsurance cessions
  • New players, insurtechs: growing quickly need reinsurance support to face the solvency ratio requirements, the uncertainties, volatility linked with this new venture and cede a igh % of their premium through quota shares
  • Increased insurance prices following losses on commercial and retail business impact the proportional reinsurance premium
  • Increased reinsurance prices: Overcapacity has gone! After a string of losses, on Cat Property specially, not allowing a return adequate to cover the cost of capital during too many succeeding years many players have reduced or withdrawn capacity leading to price inscreases
  • Better understanding of potential loss accumulations across lines of business and across the world, both on traditional and on emerging risks lead to a demand increase for reinsurance cover.
  • An increase penetration of reinsurance on the Life side with financial deals and big volumes at stake.


The Insureds

1975 insurance : 

  • Is well-known in the western type countries among the people and corporates
  • For individuals this has mainly to do with Motor Third Party Liability insurance which is in many countries compulsory by law, household/homeowners insurance coming after
  • For commercial/industrial entities the main risk is considered to be Fire.
  • Is hardly known in most countries for political, cultural, economic and/or social reasons.                         

Today insurance : 

  • Is spread worldwide with huge developments in Brazil, China and India for instance
  • Is better understood and looked for by insureds, people and corporates, more and more risk adverse
  • Covers many more types of risks which were not known and/or not insured in the past
Despite this
  • Wider spread of geographical reach
  • Larger range of products offered
  • Better understanding from insureds of insurance purpose

A role which expressed as % of worldwide GDP is decreasing!


The Insurers

1975 : Stock cies, mutuals and cooperatives, family owned cies, offer their products most of them operating in only one market. A famous Corporation called Lloyd’s has its own way.

  • Small cies: A huge quantity, many mutuals: Finland, a market with only 4.5 Mios inhabitants (I enjoyed a training course at Sampo in 1977) had more than 100 cies, most of them with a premium income below 1 Mio €. /
  • Middle-sized companies: good number, regional, client specific or Line of Business dedicated ones. They share an important part of the market
  • Big companies: quite a few but not dominant in fragmented markets.
  • Globals: pretty rare, AIG, Allianz, Generali and Zurich, few US and UK cies

Nota bene:

  • Captives created in the fifties in US more for tax avoidance purpose are rare in Europe, but developing, for instance Swedish captives incorporated in Luxemburg  
  • Communist countries or tightly controlled states (India): few state-owned companies

Today's landscape

Traditional cies have disappeared by hundreds.
  • The concentration process did affect smaller players, medium-sized and bigger ones.

  • The surviving smaller and/or specialized cies have merged and/or extended the range of their products and/or their geographical basis to remain relevant.

  • The remaining big cies have increased their market share in their core markets. They have eventually divested from others where they did not reach the size targeted.
  • Globals: Some cies have reached the size of a global player through M&A.
In Europe: AXA, Ageas, Ergo, Mapfre, Talanx went up, others down (RSA).
In Asia: Australian, Japanese, Korean, and Chinese giants spread their wings


New ones, “let me jump in your game” as said Jim Morrison, have appeared in 2 waves with disrupting distribution approach.

From the eighties onwards Bankinsurance and Direct insurers

  • Bankinsurers:  Banks, using their client base, selling over the counters, have invaded the insurance field and been particularly successful with Life products taking over more than 50% market share in France within 2 years. Their position has developed more slowly on non-Life due to the nature of the business involved, infrastructure needed, claims handling etc  

  • Direct Insurers, targeting mass products (Motor, homeowners…), using call centers have entered markets with great success like UK, Israel.
The success in one country did not replicate automatically in others. Cultural differences remain an important factor. Tao has different ways.


Another Wave: Insurtech the new generation
  • Daring Entrepreneurs, supported by daring investors (1Bns$ funds 2004, 14.6 Bns$ 2021) have created platforms with technological tools (AI, database, analytics) selling mass products, Motor to start with, short cut in offering and underwriting at an attractive price.

  • Insurtechs grow quickly their market share through their disruptive marketing approach and attractive prices at the cost of traditional players, this with the support of some reinsurers.

  • Insurtechs consume a lot of cash. If their growth attracts initially additional capital at some stage it does raise eyebrows and doubts.

  • To be an insurtech does not mean automatic success: the failure of 3BI which was supported by 21 well known (re)insurers (but no brokers) is one example, more are bound to happen. Investors are less enthusiastic about funding an ever-postponed return, and the dramatic downward trend of the stock value of once promising cies is a noisy wake-up call.

  • Some players, financially sound and well-established have opted for a cooperation with insurtech cies using their platforms and paying fees and/or investing in these.

  • For insurtechs a cooperation with well-established players may be less risky than having their own pricing, modelling, costs of building up of a book, claims handling...

Bye for now 👋

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