Life insurers have been able to negotiate decreases in their reinsurance premiums this year, Aon Benfield has found in its 2011 Death and Disability Cat Benchmarking Study.

But it finds Japanese insurers have paid much more for their cover following the earthquake and tsunami in March.

Aon Benfield surveyed 284 life and non-life insurers from 21 countries or groups of countries who collectively buy €7.5 billion ($9.9 billion) xxx or €13.5 billion ($17.8 billion) of death and disability catastrophe reinsurance.

Life companies mostly buy reinsurance for excess of loss, such as from pandemics and terrorist attacks.

The study finds France and Japan are the largest buyers but after this year’s tsunami Japan has not received the price decrease.

In all countries but Japan, the average rate on line (ROL) – the percentage of premium paid for the unit of cover – was 1.2%, a decrease of 4% on last year across the nine countries surveyed.

“Following the Japan earthquake and tsunami in March 2011, there was a 23% increase in ROL from 2010 to 2011, whereas the purchased capacity increased by 7% in the country,” Aon Benfield said.

Head of Aon Benfield Analytics for Europe, Middle East and Africa, Marc Beckers, says catastrophe excess of loss covers remain “a very cost-effective method” to mitigate extreme mortality events, other than from pandemics.

“The cost of ceding the catastrophe risk to reinsurers is well below the internal cost of capital of insurers,” he said.