After a challenging renewal at the start of this year, the attention has swung back to the client ahead of 1.1, although reinsurers will maintain underwriting discipline and safeguard more favourable terms and conditions, according to Dirk Spenner, Managing Director EMEA, Gallagher Re.
Reinsurance News met with Spenner at the annual meeting of the reinsurance industry in Monte Carlo to discuss market sentiment ahead of the key January 1st, 2024, renewals.
He explained that after a very difficult renewal period at the end of last year, the market is looking more orderly ahead of 1.1.
“Leading up to Jan 1st, 2023, there was uncertainty on the side of reinsurers and what they could do, but it also had an element of them stalling the process,” said Spenner. “A lot of our clients don’t buy reinsurance as a convenience; they buy reinsurance as a necessity. And that’s something that some of the reinsurers didn’t really pay the right attention to.”
According to Spenner, last year was characterised by reinsurers making requests as they explained to their counterpart what they need, what they observed, and what their priorities were.
“This year, I think the attention is a lot stronger towards the client. So, what does the client need, and where are they with their business and how can the reinsurer support, and I think that’s an important switch that we’re seeing in Monte Carlo,” said Spenner.
Generally, Spenner expects to see a more orderly Jan renewal in 2024 where reinsurers are prepared to provide an opinion and provide capacity, supported by the fact they have greater confidence that they can buy retro.
“Most reinsurers that I see want to grow their cat book because they see it’s adequately priced, and they will want to grow their capital with terms that makes sense.
“I think we will see a market where on placements that are not loss-affected and they don’t need corrections for other reasons, a market that trends towards risk-adjusted flat, and then let’s see. And so, from that perspective, it’s a much more positive meeting,” explained Spenner.
By and large, Spenner expects reinsurers to maintain underwriting discipline.
“The concessions that reinsurers requested from their clients last year, we would expect that the reinsurers would want to defend that really strongly. There might be concessions in some other areas in order to make sure that they safeguard some of the things they brought into covers last year,” he said.
In terms of demand, Spenner told Reinsurance News that this is already increasing and that he expects this to continue with more buying at 1.1.
“The PML increases driven through inflation have certainly outpaced the extra cover that was already purchased.
“Some companies didn’t want to go into the hard renewal market with a programme that’s already challenged and then buy on top as well, so they might want to have some catch up now, and also for 1/1 where they believe that capacity is available at more economically friendly terms,” he said.
