During its recent virtual reinsurance conference, an S&P Global Ratings’ panel discussed how the dialogue between brokers and reinsurers is shaping up ahead of the 1/1 renewals.
“There are a lot of specifics,” noted Justin O’Keefe, Senior Vice President and Chief Underwriting Officer Property for RenRe.
“Generally, for the first time in a long time, both brokers and clients are willing to accept, almost on all lines, all geographies, that there are pricing terms and conditions that are going to be more beneficial to reinsurers.”
However, this would be a huge assumption that reinsurers haven’t changed their risk adjusted view of risk.
He added: “So, I think people have conceded, buyers have conceded that pricing and terms need to change. I think the good news is, and this is a general statement, but most of our clients are receiving very healthy rate increases across multiple lines of business.”
Bryon Ehrhart, the Global Head of Strategic Growth & Development and Global Chairman for Aon further noted that experience among reinsurers plays a huge factor towards how they shape up before renewals.
He said: “Experience matters. And the way we set these relationships between cedents and reinsurers is really based on a view of the business model of not just the transaction, but the entire relationship amongst all treaties. But where we have specific treaties with performance issues, we need to learn together as partners what we have learned together.
“What is the underwriting basis that we have at street level pricing for our clients and what they’re getting from their insurers, and what are they changing in the way that they view that risk.
“Learning from frequency, containing some of the volatility and the uncertainty through contract terms on the insurance policy etc., and making sure that the rate that they’re getting reflects the risk. And, when that’s true and the reinsurance has to compete with other forms of capital and it does so very, very effectively.”
