NEWS
Interpretations of an orderly renewal may differ
The expectations of reinsurers and cedants may yet vary, says NewRe’s CUO.
Interpretations of the buzzword of the conference may differ depending on which side of negotiations you are on, according to Dirk Herrenpoth, chief underwriting officer P&C at NewRe.
The word “orderly”, frequently used in reference to the 1/1 renewal, can be heard around Baden-Baden.
However, Herrenpoth cautioned: “I’m not 100 percent sure whether clients and reinsurers have the same understanding of the meaning of the term ‘orderly’ in reference to the 1/1 2024 renewal.”
He suggested reinsurers may see it as “an alignment of expectations about where the market is heading and that quotes are coming in time”, meaning that communication is in a better place than during last year’s renewal process.
But, he added: “Potentially the clients are thinking ‘orderly’ means we just renew flat with maybe some inflation adjustment, but there’s no bigger changes in price, in wording, in structure, etc. So here, I could potentially sense a mismatch of interpretations.”
Herrenpoth said that a key difference from last year’s renewal is that between Monte Carlo and Baden-Baden, Hurricane Ian occurred.
“Last year, clients simply got caught by surprise.”
Dirk Herrenpoth, NewRe
“That was a real game-changer because the market was tightening, but with Hurricane Ian it became a truly hard market. Last year, clients simply got caught by surprise. They were perhaps expecting price adjustments, but they were not expecting that reinsurers would refuse to quote.
“Many market participants simply kept their powder dry for a very long time.
“This year, I hope it turns out to be true that expectations are more closely aligned. There is more preparedness of the market, but the nuances in understanding may be different. And that is potentially the tricky thing of this renewal.”
Herrenpoth said that one of the big issues from the last renewal—increased retentions—was not something that NewRe has been dogmatic about.
“In a way, we see retention has to go up—full stop. If the client, for whatever reason, cannot afford a higher retention this is generally speaking OK for us, but we have a price tag.
“And if the client is then prepared to pay the price for lower retention, that is OK for us.”
Main image: Shutterstock / TK Kurikawa