Challenges facing reinsurance companies

The global insurance firms formed after the merges are able to insure against risk which individual companies would otherwise need the reinsurance companies to cover. The advancement in technology and the pressure from regulatory agencies have also made the insurers to understand and control the risks on their books. Secondly, investment companies are offering stiff completion. New products have been developed in the market and are threatening to replace reinsurance. An example is the catastrophe bonds. The bond covered earthquakes that occur in the Pacific coast on the country, ha profound damage to property, and resulting from an earthquake of 7. 8 magnitude or greater. The first earthquake which occurred in September, having occurred in the Pacific coast, and being of an 8. 1 magnitude, was able to trigger the payment of the bond because it met the magnitude and location retirements.