Discussions about capacity are more complex at this year’s Monte Carlo than at previous meets, according to Jim Bichard, global insurance leader, PwC.

“It feels to me that the narrative this year is more complicated than I can ever remember it,” he said.

Some years the market is hard—there is more demand than supply, he explained. “But this year it feels that there are so many factors that it’s hard to tell which one is going to win,” he said.

“You’ve got inflation on one hand, but then a quiet storm season on the other hand; we’ve had two years of rate rises so there’s a bit of fatigue, but on the other hand you have interest rates. And climate change—there’s factors either way. It definitely feels that reinsurance capacity is at a premium, if that’s not a bad choice of words. It’s definitely hard to raise new capital.”

Bichard said the total amount of capacity available feels as though it isn’t any better than it was and it may even be tougher. He thinks this is having an impact on rates, and that the risk appetite for nat cat means that rates are going to continue to harden for 1/1.

For Bichard, the key topics when he is meeting clients include inflation, environmental, social and corporate governance issues, geopolitics, recession and interest rates.

“They’re asking us about the deal environment, and they particularly want to understand the drivers of value.”

For example, they’re asking about the multiples they can gain in the market, about the current interest in managing general agents in distribution, and how those deals are being impacted by inflation or whatever it may be, he said.

“We talk about live deals and the run-off market for our specialists, which is growing like crazy. Every year we say the run-off market has grown bigger and then there’s more deals.

“Even in the last two or three years the market has grown by a couple of hundred billion dollars. It almost feels as if it’s never going to stop growing,” Bichard said.

Transition to net zero is another topic on the industry radar, he said. “In the last couple of years people have been talking about climate and risk because of the cat losses—what’s happening with wildfires, floods, and storms.

“This year was definitely more about the transition, and how the decarbonisation agenda is impacting our insurance clients. To be honest, I think we’re just at the beginning of that conversation.”

Bichard added that there’s a pretty strong view that climate change has contributed to worse losses this year. “The next step of that is our clients retreating from cat-exposed lines. That doesn’t make the problem better—it makes it worse because then a lot of people don’t have cover, or the right cover, or they can’t afford it. So there’s a sustainability point there.

“The ultimate solution is decarbonisation so we can rebalance things. But that will take some time and on that, PwC tries to bring in insight about other industries because our clients aren’t experts on oil and gas, energy or automotive.

“We have expertise in PwC, so that’s where we try to bring insights from outside the insurance industry,” he concluded.