Moses Ojeisekhoba, CEO Reinsurance at Swiss Re, has warned that the adverse social inflation trends afflicting the re/insurance market in the US could easily spread out to other parts of the world.
Speaking at Swiss Re’s press briefing at the RVS 2022 event in Monte Carlo today, Ojeisekhoba and Thierry Léger laid out the challenges facing each of the reinsurer’s main business segments as it heads into next year and the crucial January renewal period.
The executives acknowledged that it is typically the natural catastrophe side of their business that commands the most attention, but they warned that costs on the casualty side are also rising, and these must be reflected in pricing negotiations for next year.
Social inflation has of course been widely recognized as a major issue for reinsurers with exposure to the US casualty market for some time now, with Swiss Re itself having previously spoken out on the impact of litigation funding in this line and geography.
But during Swiss Re’s Monaco briefing, Ojeisekhoba cautioned attendees against the complacency of assuming this will remain only a US issue.
“Everybody may think: ‘Okay it’s the US legal system, it’s not fit for purpose, it’s only the US,’” he said. “In reality, when a fund finds that it can make a lot of money in one jurisdiction, the tendency is they will try to replicate that in other parts of the world.”
“So we will begin to see some of these trends, I’m afraid, in other parts of the world as well. And it’s important that we understand that well and we design the products appropriately and we make sure that the pricing is at the right level,” Ojeisekhoba continued.
The briefing highlighted how this propensity for complacency in the view towards casualty business, versus the more striking catastrophe side, played out during the COVID pandemic.
“We’re extremely conscious of things like social inflation and the pause that COVID provided with cases taking place around the entire world, and the false sense of security that it provided,” Ojeisekhoba remarked. “We’ve seen that bounce back, and unfortunately what we begin to see around the US and other parts of the world is that this trend will continue.”