Models used for ‘herd mentality’ pricing, says Michaelides

There is a danger of a herd mentality being applied to reinsurance pricing, with everyone relying on the same models and having no independent view of what the price should be ¬– according to Nicholas Michaelides, global director of reinsurance at the ACE Group. Speaking at the World Insurance Forum in Bermuda he said that the calibration of pricing had effectively been put out to a third party with the industry not putting enough of its own data and information into the calibration process. He went on to argue that ‘gathering round the model’ in this way was not underwriting and does not address the fundamentals of getting the right price.

Reg Campbell, head of group reinsurance at Promina Group, was more positive about the use of models believing that all the players have a similar ability to work on their own figures but there is