A recent study by Benfield Group Ltd. entitled “Global Reinsurance: Capital Consequences-Billion Dollar Question” predicts a hardening in reinsurance pricing for the coming year, given reinsurers increasing exposure to recent catastrophes, such as Hurricane Ike, and the fallout from the global credit crisis. Click here to review a copy of that report.

Although the report forecasts that the losses related to Hurricane Ike appear to be significantly less than the impact felt by reinsurers for Hurricane Katrina, it predicts that the combination of natural catastrophe exposure with reinsurers’ investment losses stemming from the financial crisis will lead to an upward shift in pricing in the reinsurance market for the January 1, 2009 renewal season.

The Benfield report follows statements made last week by major insurance companies that prices in most commercial lines of insurance will also begin to rise for reasons also related to catastrophes, a decrease in investment income, rating agency downgrades and the decline in the global financial markets generally.