The eyes and brains of the re/insurance industry are assessing the state of the landscape, trying to make sense of not only where the industry is, but in which direction it is heading.
To talk about this, Kathleen Reardon, CEO of Hiscox Re & ILS, sat recently with Reinsurance News around RVS 2022 in Monte Carlo to give her perspective on the sector’s conditions and outlook.
The first thing that Reardon spoke about were the opportunities arising from the evolving market landscape.
She said: “The past few years have seen an increased frequency of loss activity from secondary perils and under-modelled events.
“However, when you look closely, some of the activity is explained by factors such as a migration towards higher-cat regions, various forms of inflation, and a broadening of terms and conditions.”
It is a market, she says, that has distinct opportunities for some.
“For markets like Hiscox Re & ILS that adjusted attachment profiles, tightened treaty structures, and incorporated a reasonable approach to inflation, portfolios are at a strong starting point for entering the upcoming January renewal season. These changes were crucial steps for the reinsurance market to deliver a sustainable market,” said Reardon.
There is no doubt that future historians will look back and term 2016-2022 an ‘interesting period’, even if it is not that much fun right now to live through.
The world economy seems teetering on recession, inflation seems out of control, the first land war in thirty years is taking place on European soil, and supply chain issues are grinding economies into a slowdown. Oh, and there is climate change.
Reardon points to this environment, labelling it a ‘complex’ one in which geopolitical and macroeconomic factors are creating a ‘large amount of uncertainty’.
“These factors,” she said, “will have an impact on our clients, for whom insured values and cost of claims are likely to rise.
“This dynamic is increasing the demand for reinsurance protection, but at the same time clients are quickly adjusting their underwriting and pricing approach to ensure they are adequately adapting to the evolving risk.”
“There are a number of challenges facing the industry as a whole; such as inflation and interest rate rises. These are ongoing issues which the market will continue to respond to. Hiscox Re & ILS is well placed to respond to these external factors,” added Reardon.