Swiss Re’s Chief Executive Officer Reinsurance Asia, Paul Murray spoke with Reinsurance News to share his thoughts on Swiss Re’s outlook for the upcoming Asia renewal season, as well as how he sees market conditions developing within reinsurance in Asia Pacific.
Addressing Swiss Re’s outlook for the Asia renewal season, Murray said: “From a reinsurance perspective, we are looking at one of the most positive outlooks we’ve seen for a while, and that we finally see there’s going to be a very material correction to reinsurance pricing. You only have to look at reinsurance results over recent years to see the need for it.
“So at this stage, everybody’s watching what happens at 1/1 including Japanese insurers that have the benefit of being able to hear all the conversations that are happening now and wait and see what actually happens in the market on 1/1, and use this as a data point.”
Moreover, with the April renewal season coming up, Murray addresses the potential of seeing further price adjustment of property catastrophic reinsurance rates during the Japan renewals.
“There is appetite for us to take that business on but the conditions need to be right and that means pricing the risk and capital appropriately and clients and insurers will need to retain more of the risk.”
Reflecting further on the upcoming renewals, Murray explains what Asian cedents should be expecting to see during the season.
“This is going to be a tough renewal. It’s going to be tough because prices are going up, and you might struggle to get capacity for what you need, and you might even have to look at other places for capital.
“We will prioritise companies that have existing relationships with us – helping them through this renewal. But our message to insurers is please start your conversations early, because it’s more than likely that capacity will get used up through the renewal, and leaving it too late could mean you will also pay a heavy price for it.”
Furthermore, Murray highlights Swiss Re’s plans for significant growth within Asia, and what forms of business this entails.
“We have been growing in Asia for a number of years now and this represents a very meaningful part of our global income on an economic basis. So that’s been a very positive and ongoing story for us, which plays out across all different lines, like life and health and property and casualty.
“We have capacity to grow. It’s not unlimited and we will be careful where we deploy to make sure that we get a good return.”
In addition, with inflation currently remaining above historical peak, Murray commented on how much he sees inflation dominating both the insurance and reinsurance landscape within the near future.
“The thing that insurers should be thinking about not just for reinsurance, is how are they going to compensate themselves for the risks they take. Consumers will have to pay more for their coverage, but I’m not sure insurance companies are ready to put premium rates up enough to cover the cost of inflation. But they will need to put rates up, insurance will need to go up just like everything else in the economy.”