The first half of 2022 was “the most challenging property market we have seen in a number of years”, according to Dean Klisura, President and Chief Executive Officer of Guy Carpenter.
Speaking during Marsh McLennan’s Q2 2022 earnings call, he said that US property catastrophe rates have increased 15% on average through the first half of the year, the largest increase seen since 2006.
“The June 1 mid-year renewal was particularly challenging as we saw property cat capacity really constrained globally with particular challenge in the U.S. and London wholesale market.”
“Demand for our advice and solutions remains very strong as our clients try to manage volatility on their balance sheets. And our clients are seeking strategic advice on systemic risk.”
“Every day, we read about wildfires, convective storms, floods throughout the world. Our clients are asking us to build tools to help them manage through that volatility and understand how they manage their businesses moving forward.”
Asked if he is seeing any client changes in response to higher pricing, both on the primary side and also in reinsurance, John Doyle, Group President and Chief Operations Officer, said: “Prices ran up in both insurance and reinsurance. Insurers and reinsurers remain concerned about elevated cat losses over the last several years, including secondary perils.”
“They’re spending a lot of time better modeling and understanding secondary perils. Inflation, both core inflation, but there are concerns about social inflation as well, and then the frequency of large losses. Insurers led the turn in the market several years ago. Now reinsurers are pressing on price and terms and conditions.
“So, the things have changed a bit. But as I mentioned, retail pricing, insurance pricing remains up. Martin, maybe I’d ask you to share some observations first, and then we’ll ask Dean to talk about what’s going on in the reinsurance market.”