SURVEY
Capacity, rates, & PFAS top the list of industry’s concerns
While it is always nice to consolidate long-term relationships in picturesque Baden-Baden, there is some tough business to be done this week as capacity remains selective and rates are stubbornly high.
The availability of capacity, how and where it will be deployed, and what rates will be expected for it in the context of recent losses are the key concerns attendees will attempt to untangle and alleviate over the coming days in Baden-Baden, as they look to lean into long-term relationships for answers.
That represents a bird’s-eye view of some of the results from a pre-Baden-Baden survey by this publication, surveying the wider markets and designed to outline the concerns of the market and potential talking points at this event.
These core issues dominated the responses of those surveyed, when asked what the main talking points of the conference will be. Able to select multiple issues, respondents largely selected “the dynamic around rates and terms and conditions” alongside “availability of capacity” and “losses from recent events” as being top of mind as they head to Germany, with inflation not that far behind.
In the written responses, which reflected these themes, there was a sense that the industry wants to avoid the chaotic and last-minute nature of the January 2023 renewals.
“There will be a real focus on business in Baden this year,” one said. “No-one wants a repeat of what was a very late renewal last year, with a lot of uncertainty.”
“There will be a real focus on business in Baden this year.”
A bumpy ride
That said, there are concerns that some parts of the market could be in for a bumpy ride. While the consensus seems to be that property has found its way through some complex and uncertain times, some delegates now point to new concerns in other parts of the market.
“Casualty is a growing concern for some,” one respondent said. “There is a sense in some quarters that this year-end could have similarities to what property went through a year ago. But that is by no means clear at the moment. That is why meetings such as this are important.”
The survey threw up some very specific concerns where respondents were asked open questions. Some noted that strikes, riots and civil commotion clauses (SRCC) remain a point of negotiation that they hope to resolve in Baden-Baden.
“If it weren’t for everything else going on, PFAS would be higher up the list of concerns.”
A number of respondents highlighted concerns over the insurance implications of PFAS (per-and polyfluoroalkyl substances), a group of chemicals commonly used in fire-fighting foams and a wide range of household items. There is a growing wave of litigation over water contamination and rising concerns among insurers that PFAS could expose them to the same kind of expensive, unanticipated claims as asbestos did a generation ago.
“This is a growing concern that is not going away,” one said. Another added: “If it weren’t for everything else going on, PFAS would be higher up the list of concerns.”
Another trend indicated by respondents was that Baden-Baden will be a good opportunity to discuss solutions for cedants now grappling with high deductables and the resulting volatility from small claims hitting their balance sheets. There is a growing awareness that this could present an opportunity for reinsurers willing to think outside the box.
“One discussion point will be the trends from standard reinsurance products to structured risk transfer solutions,” one said.
Main image: Shutterstock / Roman Babakin