Discussions in Monte Carlo were centred on three core areas, all of them based around supply dynamics, Tom Wakefield, chief executive officer of Gallagher Re UK, told Monte Carlo Today.

These are: cyber, political violence and terrorism (PVT), and cat.

Cyber is moving into the “more mainstream” kind of re/insurance market, he said.

“At Gallagher, we have an absolutely best in class, premier cyber team, and we continue to invest in that capability. What I’m seeing now, which is different from what I’ve seen before, is that we are starting to get past this conversation about ‘all of your limits could go in a single event’.

“It’s a world without barriers and people are looking much more into the policy detail, using the modelling capability that now exists. And they are starting to form a view on risk we haven’t seen before.

“I’ve had a number of meetings with re/insurers who are saying, if you can help us bring together some of the model views, using the predictive analytics we have, then we can start to write more risk because we can get them comfortable with the tail exposure that exists in that market.

“For us, that’s vital, because supply is constraining the market. While it’s been a great story of rate rise following the ransomware challenges in the market, the impact is that premiums have risen significantly and, as we all know, Lloyd’s is constrained by premium and not just aggregate.”

Re/insurers have the appetite to offer PVT, Wakefield said.

“There’s existing coverage, but it’s nuanced, depending on whether we’re talking about aircraft leasing, and how that’s aggregated together; war on land versus more traditional terrorism event-type exposure. What has become clear here is that we don’t yet have a common view across the market,” he said.

“We’re not talking about structure or particularly about price. It’s a competitive marketplace but it’s not helpful to our clients to have 18 different versions of exclusionary language, or 10 different approaches to the way that business is going to be. My takeaway from that is we’ve got a lot of work to do as we are a broker leading in that space.”

Will PVT be the next hard market? “The definition, for me, of a hard market is that you can’t place it. I don’t think we’re at that stage but we do need to be thoughtful about the type of coverage the market should be offering,” Wakefield said.

The third focus area of discussions in Monte Carlo has been the “macro cat piece”, he said.

“If inflation is driving values to the extent where US cat is going to need to be purchased, then clearly that is going to go up against the supply barrier because we’re not seeing positive loads of investment coming into the market.

“But we placed $100 million of new retro limit worldwide only a month or so ago, so we need to be realistic that, for a particular placement, there will be supply constraints.”

“I don’t want to sit here and talk the market down because it is a tough market. If you’re needing billions of dollars more limit, it’s going to be very difficult, but if you have core reinsurer relationships, then there is an appetite to write more cat at the right price estimates. That’s come across loud and clear from reinsurers,” Wakefield concluded.