Q3: WILL THE RESTRICTIONS ON FACE-TO-FACE MEETINGS IMPACT THE RENEWALS?
“We will find the best access point for the carrier around what capacity you need.”
Seth: We’re lucky that a lot of our carrier partners are based in Bermuda, so having those face-to-face conversations or a quick coffee or a drink, is happening already. Those meetings will continue and will be very helpful as we finalise the negotiation process. We are very coordinated and there is a lot of connectivity among the global teams.
Whether you’re a broking team in London or Bermuda or the US, we will find the best access point for the carrier around what capacity you need. In fact, we’re moving towards a more efficient way of placement, and particularly the Bermuda market is very efficient when it comes to whether it’s filling certain excess layers or looking at reinsurance towers or retro placements.
Certainly given where we are with the pandemic we feel we’re in a very good position as we go into the 1/1 renewals season.
On the talent piece, we continue to have an overall challenge. Despite COVID-19, it has been yet again another active summer in terms of talent moving around.
There is a talent crunch. Some people refer to it as a talent crisis in our industry and I agree we will have a talent cliff, within the next five years, as a large number of industry leaders are coming up to retirement.
That is a challenge specifically to the renewal discussions. We will have senior colleagues overseeing the final negotiations and placements. Yes, we have junior colleagues who do a lot of the work as well, but when it comes to final decisions, final negotiations on behalf of our clients, we’ll ensure that senior more experienced colleagues are involved.
“People want to focus on fundamentals.”
Malloy: I remember my first hard market in the 1980s and one underwriter, a casualty underwriter, saying he would not quote anything until December 24. We are not in that position. It is not a question of name your price and the client has to take it. Hopefully, the discussions will happen in a thoughtful way.
I’ve been saying to my team that we’re not in business to dictate ridiculous terms to anybody. Clients that have to accept any set of terms are probably clients I don’t want on some level. We encourage our folks to engage with clients and understand this year is not simply the renewal of the existing structure at a different price; it could be a different approach, a different structure.
We encourage dialogue and communication. For a lot of people in the industry, it’s a chance to step up and show what they’ve got. Some people are good at broken field running, good at creating opportunities, and this is a time when those people are going to shine.
We have to hope that occurs, because if people are not negotiating or trying to understand what the other person needs or is asking for, it’s going to make for an unsatisfying renewal.
Simons: Uncertainty breeds fear and fear can lead to greed. The messaging from most companies is very clear: the performance of the business has to improve; they want to get back to simplicity and back to basics.
We all sell good products, certainly as a traditional carrier. But we’ve come through an environment where a long tail dynamic has been applied to short tail perils, such as hurricanes. >>
“So much ground had been given up on rate in the reinsurance space.”
<< We have to go into negotiations with everyone crystal clear around what they’re trying to achieve. People want to focus on fundamentals. If you’re selling cat there is an expectation on both sides you’re charging the correct price. Price matters.
Dunleavy: There’s a lot of focus on rate change but what is underappreciated is the amount of limit compression going on among primary carriers. They are reducing their limits, pushing up retentions.
That’s why you know that much more of a disciplined market change is going on and it will be more persistent than the kind of steep short spike of an event-driven change. This was building and I think it’s going to continue for some time because so much ground had been given up on rate in the reinsurance space in particular.
We want to empower our underwriters, give them really clear principles and guidance around return expectations but also around contract language that needs addressing.
From a talent perspective, if I were in my 30s I would be salivating at the opportunity to grow my own development and participate in this market. A lot of people get this only a couple of times in their careers. That will drive discipline and ultimately mean proper underwriting in the market.
“I hope that the next generation is going to look more diverse.”
Huff: I particularly like to hear the theme of entrepreneurship and what opportunities there are in the market for entrepreneurs; it goes again to Bermuda’s strength of agility and innovation.
Brown: We have talked about the talent from an underwriting perspective, and obviously that has been key to Bermuda’s success over time, but as we look at the industry, a big focus that the industry has to have is related to the next generation of leaders. I hope that the next generation is going to look more diverse from gender, race, and other perspectives.
Diversity is key, but also the ability to use new technologies and adapt to changing environments as far as insuring intangible risk versus tangible products. There’s going to be a big shift and a big need for talent over the next five to 10 years.
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