In a recent video interview with Reinsurance News, James Vickers, Chairman of Gallagher Re’s International division, emphasised the importance of attachment points for reinsurers, particularly in the face of increasing frequency of non-peak catastrophe events.
Vickers noted that while rate has historically been a primary focus, the past two years have demonstrated the heightened importance of higher attachment points.
“I think reinsurers have learnt their lesson well over the last 24 months. But attachment points are the key. If you look at the sort of catastrophe events in 2024, there’s been a huge number of small to medium-sized claims, particularly so-called non-peak claims. So, flooding hailstorm, severe convective storm,” Vickers stated.
He continued: “Reinsurers prior to 2023 were exposed to these, but by lifting up their retentions, they’ve largely stayed clear of them which has been one of the keys despite the fact 2024 is going to be, overall, a bad year for cat losses. We’ve estimated $154 billion cat losses. The reality is reinsurance has not picked up much of it.”
Vickers also suggested that reinsurers are willing to make concessions on pricing and certain terms and conditions to maintain favourable attachment point levels.
He said: “Against that background for them, attachment point is key. Sacrificing a little bit on pricing, maybe sacrificing a little bit on some of the other terms and conditions. That’s relatively minor compared to the real prize, which is keeping attachment points at the level they’re at.”
Watch the full video to hear more from Gallagher Re’s Vickers on the 1.1 2025 renewals, the property and casualty markets, the insurance-linked securities (ILS) sector, rising cat losses and more.
The full video interview is embedded below.
