NEWS
Current market is ‘the new normal’
Rates set in January 1 renewals are here to stay, says Everest Group’s Sharry Tibbitt.
The so-called “hard” market is a misnomer, according to Everest Group’s Sharry Tibbitt—this year’s 1/1 renewals were “a reset” and rates and terms and conditions are unlikely to change going forward.
Tibbitt, the global head of property and deputy CUO of the reinsurance giant, said in this renewal season reinsurers were likely to maintain rates and terms and conditions in line with the 2023 renewal season.
“I don’t like to talk about this as a hard market cycle because that implies it is coming back down,” she told APCIA Today. “But if you talk about a reset, then it is a new baseline. I do not think we are at a low, I think we are at a good place in the market and I do not see it coming down in 2024 or 2025.”
She added: “This isn’t an opportunistic hard market in which we are taking advantage of a situation. These are rates and structures that needed correction and we got the correction. Now it is about having the discipline to maintain it. It is not a punishment.
“It is recognising the world and the nat cat environment that we are operating in today.”
Tibbitt noted that the environment was one in which annual $100 billion losses were no longer the exception.
“2023 looks like as though it will be another $100 to $110 billion year of loss spread throughout the world,” she said. “It is a wild thought that this is now the norm.
“If you went back five years we would not have talked about $110 billion as an average, but it has become the average.”
“We will be able to find common ground more smoothly than we did last year.”
Sharry Tibbitt, Everest Group
Tibbitt said that reality had led to more honest and straightforward discussions with clients.
“Our clients are saying ‘this is our real need’ and we are comfortable saying ‘this is the real rate that we need’. We may not be able to see eye to eye, but we will be able to find common ground more smoothly than we did last year—which is very important.”
She does not expect there to be much change on attachment points or terms and conditions, but said she does expect rates to increase “north of 4 percent” which is the current general rate of inflation.
On terms and conditions, she said there was unlikely to be much movement in the renewal season.
“We got them back in 2023 because we needed to,” she said. “We had a decade’s worth of renewal in one renewal.”
She said cedants had had a year to put a “laser focus” on their own profitability, rates and valuations.
“We feel the quality of the portfolios coming into the reinsurance market from our clients has become better as well,” Tibbitt said. “That’s what the conversations are about. How are you addressing the climate-influenced weather events we are seeing? There is no reason to believe we are going to revert to what we experienced 10 or 20 years ago.”
Main image: Shutterstock / Triff
