With competition and change still the defining factors in today’s market, re/insurers must carve out “distinctive strategies” to maximise their potential for success, according to John Trace, CEO, North America, at Guy Carpenter.
Commenting of the broker’s annual review of property and casualty (P&C) results, Trace noted that new sources of capital and low interest rates are increasing the pressure to focus on underwriting rather than investment returns.
At the same time, re/insurance business models have been progressing alongside developments in data, information and technology, which are influencing the way companies analyse, select, distributed and mitigate risk.
Looking at results by segment and business model emphasises the extent of the pressure companies are under to generate profitable returns in the current market.
“Our deep analysis of industry segment breakouts reveals pockets of volatility and profitability amid the evolving challenges and opportunities faced by carriers as they carve out distinctive strategies and operational initiatives to create opportunities,” said Trace.
In its 2019 Risk Benchmark Research, Guy Carpenter reported that property lines in excess of $200 billion of written premiums are experiencing pressure due to catastrophes, reinsurer rate actions and atypical reserve adverse development.
“Insurers are re-evaluating capital and how to better leverage reinsurance as market dynamics shift,” Trace continued.
“In addition, companies have begun to think about how to translate this all into strategic evaluations of which lines/insureds are driving loss cost increases, rather than broadly passing rate increases to the entire portfolio.”
Guy Carpenter concluded that re/insurers will be tested on their ability to pick opportunities with care, given the likelihood of continued competition and evolution in the market.
Having good data and analytics alone will not be enough, it warned, as successful firms will be those who are able to leverage data and turn it into actionable strategies that create opportunities for growth.
