In a recent Marsh McLennan third-quarter earnings call, Dean Klisura, President and CEO of reinsurance broker Guy Carpenter, shared insights into the upcoming January 1 renewal period and the prevailing market conditions in the reinsurance industry.
“We expect challenging market conditions to persist for property cat at the upcoming January 1 renewal, driven by inflation,” Klisura said.
The industry has experienced an influx of cat losses, with many being attritional losses and billion-dollar-plus events. Political instability remains a contributing factor to the volatility.
“We do expect pricing to remain firm, in property cat. It’ll vary region by region, it won’t be what we saw last year, as an example in the US and Europe, but we do think that firmness will be there,” Klisura continued.
Reinsurers are expected to exhibit an increased appetite for underwriting more business, particularly at higher attaching property catastrophe layers.
Klisura emphasized that reinsurers are likely to maintain discipline in attachment points, pricing, and terms, showing no signs of a retreat from this approach.
The CEO anticipates that property catastrophe capacity in the market will remain adequate, offering a more manageable renewal process for clients without the supply-demand imbalances seen in the previous year.
Klisura expects a surge in demand for reinsurance, especially in key regions like Europe, as clients seek to bolster their risk management strategies.
In contrast to the property catastrophe sector, the US casualty market is approaching the renewals with caution. Reinsurers are concerned about prior-year loss development in certain lines, influenced by economic and social inflation.
Klisura anticipates some downward pressure from reinsurers on ceding commissions for clients with quota share contracts in certain casualty lines.
Despite the cautious approach, capacity in the casualty sector is expected to remain sufficient, Klisura noted.
