Munich Re thinks the tumultuous renewal the market endured last year will not be repeated this year. While cedants may not always be happy with deals, and reinsurer gains from the past year will not be rolled back, primary insurer clients will at least approach this renewals cycle aware of Munich Re’s stance.

“There will be no spectacular change in our appetite this renewal,” Guido Funke, Munich Re’s chief for global clients and Lloyd’s, told Monte Carlo Today. “We had a clear appetite last 1/1, which itself hadn’t changed much from the past years.”

For Munich Re, that means being “prepared to grow” in nat cat and specialty wherever terms and conditions look right, while remaining “cautious” in casualty “simply because we see signs of softening” in some corners of the market that could merit some de-risking.

Now fundamental changes to structures have been completed, led by the massive hiking of attachment points, and with pricing looking adequate in property-cat, the reinsurer now believes underwriters come into their own again to examine the minutiae of what constitutes risk-adjusted pricing adequacy.

“Amid all the uncertainties and variables, it is very important to get underwriting done properly,” Funke said.

He notes that sharp increases in inflation tested underwriters. But the industry “is now doing not a bad job” on dealing with claims inflation, with constant caveat for the vagaries of inflation forecasting.

Extreme weather must also be reviewed in the quest for pricing adequacy, Funke insists. Yesteryear’s “work from the models” won’t cut it as “the industry now realises that with extreme weather, the trend only goes upwards”. Underwriters now need to be crunching the numbers on how to price that for next year, Funke said.