Contagion is a strong word to use in the context of insurance rates. We have known for some time — and trading statements from the likes of Beazley and Jardine Lloyd Thompson have emphasised — that a relatively benign catastrophe season with few huge disasters, plus the poor return on investments from bonds, have drawn fresh capital into the market.
This has meant a softening of rates to the extent that some reinsurance business is unattractive. The effect is twofold, involving more than merely reinsurance, for if that is less expensive, insurance rates also will fall — and this, according to Bronek Masojada, the chief executive of Hiscox, is the more significant effect. As alternative sources of finance become more confident about insurance as