“As a market, we have not yet demonstrated the same zeal for rate adequacy in the casualty book as we’ve seen in property, this is particularly true for US general liability, where rate is barely keeping up with inflation, despite the continuing deterioration of the 2014-2018 years of account,” suggests Patrick Tiernan, Chief of Markets at Lloyd’s.
During the latest Lloyd’s quarterly market update presentation, Tiernan said that casualty, from a reinsurance perspective, has an “eerily familiar feel” to the property market of 12 months ago.
“While pricing has thus far remained relatively subdued, we are observing upward claims pressure and lower layers of US General Liability programmes driven by persistent award inflation,” the Chief of Markets explained.
Tiernan observed that the Lloyds casualty book is dominated by North American excess insurance, protected in the main by proportional treaties.
He continued, “We only write about 5% of inwards casualty as a reinsurance market. So, we need to be prepared to absorb any upward pressure from reinsurers to maintain an orderly renewal and not lose out on desirable momentum shifts.”
Tiernan went on to note that as a market, syndicates “prepared very well” for the property reinsurance shift last year, and as a result, there was no disorderly or panicked rebounding required around year-end.
He concluded that Lloyd’s would like to “actively encourage a similar approach on casualty for this season.”