This next renewals period is a time for reinsurers to move towards risk and not away from it in order to showcase what the industry does best, according to Andy Marcell, CEO of Aon Reinsurance Solutions.
For more than 400 years, re/insurers have provided a vital foundation for economic trade and stability, and most innovation would simply not have occurred were it not for the ability for communities and commerce to effectively mitigate risk via reinsurance.
Marcell highlighted the need for reinsurers to continue to provide access to risk transfer solutions that keep pace with evolving societal demands, and that are backed by appropriate and stable levels of capital.
In order to continue to have a fluid re/insurance marketplace, buyers and sellers need to reach a mutually agreeable outcome, and this requires effort and understanding on both sides.
Marcell said: “The reinsurance market has recently faced an increase in frequency and severity of losses, whether those be man made or natural peril, and has performed robustly in its response; however, we now face headwinds that present different challenges to our relevance and sustainability, and it is our responsibility to meet them head-on.
“In certain lines and geographies, we have moved away from the fine balance of delivering cost-effective and efficient solutions that allow stakeholders to manage their risks within their risk appetite and provide acceptable returns to capital providers. This mismatch causes friction and uncertainty. And while there needs to be a sufficient level of premium to generate returns for all stakeholders at the existing levels of capital, it is important that we continue to bring new capital to our industry to ensure a functioning, competitive marketplace for many years to come.”
Currently, clients are looking for their capital providers to offer them a level of certainty in an uncertain environment. And to lock-in their cover in a timely manner and then move with confidence into 2023, seeking opportunities not just to grow their own business, but the businesses of their carriers. As well as for sufficient governance time for quotes to be reviewed and accepted.
According to Marcell, they have noted that reinsurers who are becoming more successful demonstrate an understanding of client needs and a longer-term commitment to providing sustainable solutions in a consistent and thoughtful way.
Marcell highlighted: “We believe that the renewals period represents a time to move towards, not away from risk, and those that do so will be rewarded for their endeavours. In this relationship business, anyone that steps up to the plate will be membered and valued as a true partner. This industry was built on the sharing of risk and reward, and if we work together this will continue to be the case.”
He added: “We need to be part of the risk management conversation; be the solution, as if we shy away from taking risk, we ourselves risk losing relevance as clients identify alternative, sustainable and consistent options to manage their exposures.”
As risk experts, Marcell noted, reinsurers need to use time wisely as an industry to provide solutions that allow them to continue to grow the marketplace, innovate around new products, and meet the ever-growing needs of a global economic, interconnected world.