Although too early to accurately predict coronavirus’ full impact on the re/insurance space, BGCI Chief Executive Officer Steve Hearn can see the pandemic exacerbating the industry’s pre-existing environment of capacity hardening.
Speaking recently to Reinsurance News, Hearn noted how the pandemic will likely cause customers to look very closely at their providers, cash flow, and costs; all those forces will create further change in the market.
Furthermore, Hearn highlighted the political pressure already being applied to the re/insurance industry, on both sides of the Atlantic, in the form of the public’s questioning of the industry’s approach, and the tightening up of wordings in D&O and other obvious classes.
But ultimately, Hearn stressed the impossibility of making accurate predictions.
“It would be like standing on the steps of the casino in Monte Carlo as a storm develops in the United States and being asked what impact the losses will have on the 1/1 renewals,” he said.
Coronavirus aside, the re/insurance industry is currently staring up at what will become the biggest ever transaction in the broking space, in the form of Aon’s acquisition of Willis Towers Watson.
“These changes create huge disruption to our industry – for the people who work in it, for the insurers and the customers,” Hearn said.
“Inevitably, changes like these create a lot of people moves and we can anticipate more – the Aon/WTW announcement has certainly started another period of significant movement in our market.
“Of course, change is not just being driven by these major broker deals. There has been notable M&A activity around the world between insurers, and we have seen a number of broker start-ups.
“In addition, Lloyd’s actions over the last couple of years on performance have driven a capacity challenge.
“All these factors have been driving rate movement and people movement in the market.”
For BGCI, Hearn sees a huge opportunity, “Disaffected talent and disaffected customers looking for better homes give us the chance to demonstrate that we can provide that home for talent and that critical service for customers,” Heard added.
“The advantage for BGCI is that, unlike some private equity backed firms, we sit within a financial institution that has long-term aspirations in the sector. Moreover, it has significant fire power to exploit those marketplace dynamics.
“We are encouraged by our owners to deploy their capital carefully and selectively by hiring good people and buying good businesses. All of that means that we have a very active pipeline of talent and M&A transactions.”
