Property Catastrophe Reinsurance Pricing Study

Based on 2018 Florida Cat Renewal

The pricing approach for property catastrophe reinsurance has come a long way since the introduction of catastrophe models, though in practice it still remains a mix of art and science. 

JLT Re has been using an in-house pricing tool, Layer Simulation Tool (LST), to help instill clarity and transparency in the process, and assist clients in better understanding costs and benefits of various reinsurance options. This whitepaper aims to assess the prediction ability of this pricing tool, offer some insight into quoting behaviors of reinsurance market participants, and explore the pricing mechanisms. 

All the analyses are based on 2018 renewals of Florida CAT programs, though the same methodology can be applied to a much broader base of reinsurance programs, particularly for well-modeled regions and perils.