Despite having to navigate an unprecedented landscape as a result of the COVID-19 pandemic and subsequent remote working, the important January 1st, 2021 reinsurance renewals “started off more constructively than in the past,” according to Adam Szakmary, Director of Underwriting, Bermuda, Hiscox Re & ILS.
Mindful of the time of year, the final day of Prospectus 2021 opened with a detailed exploration of the fast-approaching January 1st renewals season.
Against a backdrop of unprecedented challenges being driven by the ongoing COVID-19 pandemic, panellists Szakmary of Hiscox Re & ILS, alongside Markel Corporation’s Chief Risk Officer (CRO), Julia Chu and Lorenzo Volpi, Partner at Leadenhall Capital Partners LLP, discussed their experience so far.
“Typically, you’d have your catch up in Monte Carlo and that would be an environment that people may or may not have their business plan signed off, we may or may not have a hurricane or some other event happening while you happen to be having your early renewal discussion,” said Szakmary.
“We approached it from the perspective that some of the meetings pushed a little bit further back, but were more formative in nature. So, we had either business plans agreed or understood by ourselves or some of our counterparties, because we’re obviously both a buyer and seller of reinsurance.
“I think, ultimately, what we learned in the first-half of the year, through our remote working, worked pretty well. I have no complaints of actually how it kicked off. And, certainly, it did kick off, I think, orderly,” he continued.
Markel’s Chu emphasised that from her firm’s standpoint, the renewal negotiation started off really well because of the re/insurer’s frequent communication with brokers and markets throughout the year.
“We understand that transparency and communication is key at this time. We basically have scheduled monthly catch-ups with markets and brokers, so they don’t hear any surprises. So, by the time the renewal comes along, they pretty much know what’s going on with Markel, with our teams, and with our underwriting strategy and philosophy,” she explained.
Later adding: “I do not believe, going into 2021 renewals and starting early negotiations is advantageous. I do believe, doing the ground work, staying communicated with our markets and brokers is the key. 2020 has had a lot of unprecedented events, even though there’s only six more weeks until the end of the year, we really do not know what will happen and what’s going to turn out.
“So, what we try to do is to do a lot of prep work, a lot of communication and trying to understand where the market is going before we start negotiating.”
In spite of a slowdown in more recent times, alternative, or third-party reinsurance capital continues to play an important role at renewals. From an insurance-linked securities (ILS) perspective, Volpi stated that renewal negotiations have also been constructive from the start.
“I think typical of a hardening market, every time that you expect a bit of dislocation during the key renewal negotiations, there is always a slightly late start, but no one knows where this is going,” said Volpi.
“So, I think it’s not later than usual, but there’s definitely a feeling that the market is getting harder, and usually that pushes the renewals closer to year-end.”
To watch every session on-demand please visit the Prospectus 2021 website.