Trevor Carvey, Chief Executive Officer (CEO) and Chief Underwriting Officer (CUO) of newly launched P&C reinsurer Conduit Re, has said that he expects 2021 to mark a “generational transformation” in the way the re/insurance industry operates.
“Conduit Re will be at the forefront of that change,” Carvey said as part of Conduit Re’s 2020 annual report.
Among the most important shifts the market can expect to see this year are more transparency, changing working practices, and a real-time approach to sharing data, the Conduit Re executive explained.
He also pointed to a “step change” in the adoption of technology that will enable more modern and efficient underwriting processes.
“I have no doubt others will eventually adopt the same industry changes that we are now embracing as a result of our freedom and flexibility as a start-up,” Carvey noted. “But we have a head start and will work to maintain this advantage by being a business that is always one step ahead of the pack.”
Commenting on the state of market pricing in 2021, Conduit Re Executive Chairman Neil Eckert, added: “It is encouraging to see a market turning willingly as a result of market discipline rather than a forced reaction to a sudden reduction of industry capital.”
“I believe this is leading to a more sustained adjustment in the pricing of event risk, but is also leading to a continuing hardening across all lines of business in both terms and, most importantly, conditions,” Eckert continued.
“This will benefit the industry as a whole. It will also lead to increased awareness of the systemic nature of some risks and the need to be able to quantify exposures. The 2020-2021 years could well be remembered as the years of the unmodelled losses as evidenced by Covid-19 and more recently winter storm Uri. The market will have to adjust to start pricing in basis risk of this nature.”
Some commentators have questioned the durability of favourable market conditions this year in light of recent capital raises, but Eckert remains confident that these raises are “immaterial” compared to the extent of recent underwriting losses and the need for continued reserve strengthening across the industry.