Chief of Markets Patrick Tiernan has cautioned that the insurance and reinsurance marketplace at Lloyd’s of London is “not yet universally hard” and has emphasised the need for rate adequacy amid challenging conditions.
Addressing an audience as part of the Lloyd’s market Q3 update, Tiernan acknowledged that syndicates are currently operating in a “difficult market.”
As part of his speech, he noted that the overall reinsurance market has “materially shifted” and requires close attention ahead of the January renewals, stressing that Lloyd’s can’t go around with its head in the sand.
“The need for rate adequacy is paramount in periods of high uncertainty and volatility like this,” he told the audience listening to the Q3 update.
“Whilst we do see areas of the portfolio which are in retreat, and other areas that are rating mainly for inflation and not much more, we expect the upwards pressure on market pricing, in aggregate, to continue, driven by critical cat and stressed specialty classes,” he explained.
“Conservatism is our preferred approach. And in return, we will support sensible ambition and ensure speed of response for any mid-year changes you require.”
Tiernan maintained that Lloyd’s would seek to strike a balance between “prudence and practicality” when it comes to reinsurance and capital setting, in order to allow syndicates to grasp opportunities in the market at present.
This would involve the timely approval of “logical, realistic and achievable” plans for the marketplace, he added, as well as careful traversal of the current geopolitical atmosphere.
“We believe these actions in relation to the current circumstances are appropriate,” Tiernan concluded. “But regardless, we will continue our mantra of listen, learn, act, refine, repeat.”