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Clients ‘more transparent’ on portfolio, says Everest Re’s Klinger
With huge demand for cat capacity, clients and brokers have worked hard to flex structures.
Huge demand for cat capacity and fire per-risk losses are two of the main topics in Baden-Baden this year, according to Artur Klinger, head of international reinsurance at Everest Re.
“There is a big demand on cat capacity, which is short. This year, clients have done a lot to get more transparency on the portfolios and brokers have worked during the year to make the structures adaptable.
“There have been a couple of losses in EMEA, and an earthquake in the MENA region, as well as severe convective storm losses in Italy, northern Europe, and Germany.”
Klinger said there have been some fire per-risk losses in Europe and Asia, which have different causes. “It seems there’s a trend in the European and Asian markets where we have more fire losses.”
There have been a lot of good technical discussions with clients going into the details and being very well prepared, which were mainly around loss experience and cap capacity, he said.
In terms of appetite for cat capacity, Klinger said that in May this year Everest Re raised $1.5 billion of additional capital, which gives the reinsurer “more flexibility” to respond to its clients’ demand.
“We prefer to give capacity to clients who are transparent.”
Artur Klinger, Everest Re
“We are selective in deploying that capacity to some of our core clients’ lines,” he said.
He commented that he was seeing signs of a “new normal” around cat pricing where some insurers start to charge a higher price to original policies. “Nat cat has a price, climate change has a price. And, of course, reinsurance needs to charge for this, but it also needs to be transparent and adapted to the region.
“At Everest, we prefer to give capacity to clients who are transparent and have a partnership approach. That’s going to be the new normal.”
He said that heading towards 1/1 2024, clients are “better prepared”, adding that there are areas where he expects increased retentions, particularly in Italy where there have been a couple of losses.
Klinger thinks the market still needs another two years to find out what’s going on in terms of changing loss activity which is driven by inflation, technology or climate change.
“That’s something where reinsurance and insurance need to work together and do a detailed analysis to understand and mitigate this risk. But certainly there needs to be more premium in the system to cover the losses.”
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