Addressing Lloyd’s participants and partners, Patrick Tiernan, Chief of Markets, suggested that the marketplace was disappointed with the response of many syndicates to tightening reinsurance coverages in the specialty space, and in particular within political violence, terror, and strikes, riots and civil commotions (SRCC).
Speaking at Lloyd’s latest quarterly market update presentation, Tiernan said: “We were underwhelmed with what we saw following the reinsurance renewals last year, as many syndicates, in our view, failed to respond adequately to tightening reinsurance coverages.
“This was particularly true on facilities. This is where reinsurance price increases for these coverages do not generally seem to be reflected in the direct market, and the changes in treaty terms have created exposure management headaches for a few syndicates.”
Given the extent and the late timings of the 2023 reinsurance changes, Tiernan emphasised that Lloyd’s feels it has shown enough patience to allow the market to reorganise.
“But for those syndicates that have done nothing to bridge or manage any of the gaps since their programs were renewed, that approach just won’t fly this year,” he warned.
Later in his speech, Tiernan also commented on geopolitical risks and underlined the message Lloyd’s is trying to get across.
“We need to syndicates to plan and rate for the geopolitical risks ahead of us, rather than focusing on rate increases being from recent events,” he said.