The systemic fragility arising when a small number of balance sheets, exposed to the same perils and bound by opaque commitments, carry the bulk of ceded risk.
Concentration risk lies not in the size of the players but in the invisibility of their links. The top ten reinsurers concentrate 56.4% of global non-life premiums, life counting only six pure specialists, and those same balance sheets carry the same major perils, catastrophe, cyber, aviation, specialty, so the diversification obtained by spreading cessions among them is partly illusory. The individual strength of each carrier is not in question, it is the systemic fragility of the whole they form, for individually sound institutions can form a fragile system if their exposures are correlated and their links invisible. It is a hard-market risk, prospering under cover of record profits.
Concentrating one's cyber reinsurance in a handful of carriers already loaded with catastrophe stacks two accumulation perils on the same foundations.
concentration systémique