Political violence hasn’t hardened alongside other classes of treaty reinsurance but, in the current environment, it could potentially soon enter a true hard market, Waleed Jabsheh, president of International General Insurance (IGI), told Monte Carlo Today.

Since its inception in 2001, IGI has been committed to providing specialty lines insurance and reinsurance solutions to its clients’ complex risks. “The political violence market now is extremely dislocated. It was a market that was created after 9/11, at a time when anxiety levels for these types of exposure were very high,” Jabsheh said.

“When people went into it, prices were ‘high multiples’ of what they are today and companies were making money hand over fist in this class. After 9/11, there was much less activity in that market and, because of that lull in loss activity, it became benevolent to the actual coverage that was being provided. It became a volume-driven game for many,” he added.

The political violence landscape has changed quite a bit over the last few years, however, and has included riots in South Africa last year, riots in Chile two years before that, the Black Lives Matter movement in the US that fronted civil unrest across parts of that country, and then, “to cap it all”, Jabsheh said, the invasion of Ukraine by Russia.

“That market has suffered quite a bit from a loss perspective, which clearly indicates that the behaviour of underwriters in the pricing environment is not sustainable at all. We’ve seen that shift in appetite from the reinsurers and we think that will continue.

“We’re hoping and expecting that 2023 will see a significant shift in that market,” he said.

Andreas Loucaides, chief executive officer of IGI UK, continued: “Our reinsurance renewal was in 1/7 this year and although the war started in February, which was after 1/1, the reinsurers haven’t factored anything in on that.”

That means 1/1 renewals are going to be quite important to determining what happens in the political violence market next year.

“We were at the forefront by going for renewal at 1/7, so we took a hit from the political violence perspective—from a tightening of the reinsurance terms and conditions—but because we have very little exposure to the war, we weren’t affected a great deal,” said Loucaides.

He added: “The stance the reinsurers were taking on 1/7 was quite tough in terms of exclusions around the war and political violence, so we think rates will be determined at 1/1.”

Jabsheh concluded: “The market needs to go through that renewal season. We are already starting to see signs of change within the political violence market but the biggest impact is going to be in the New Year.”