NEWS
US cedants are open to buying more as exposures grow
Cedants are concerned about growing exposures but gaps in their programmes: Beazley.
Some of the bigger cedants, especially in the US, may look to buy more reinsurance in this renewal as they mull the consequences of failing to buy as much coverage as they would like in the last renewal, combined with concerns the risks are increasing—something partly driven by the output of risk modelling firm Moody’s RMS’s Version 2023 of its model, which came out in June.
That is the claim of Patrick Hartigan, group head of treaty, Beazley, who told Monte Carlo Today that insurers will also have worries on inflation and increased vulnerabilities to cat events.
“Everyone is considering their risk appetite and demand will increase, especially in the US where they tend to be guided by the risk models much more closely.”
Hartigan said that the challenge is different for smaller cedants, concerned that higher attachment points have forced them to retain more. They are concerned secondary perils could hit their earnings as well as capital and surplus.
Bigger players are more concerned about a capital event, thus the desire for more protection. Hartigan thinks there will be the capacity to cope, at the right price, especially if reinsurers post positive results.
“Everyone is considering their risk appetite.”
Patrick Hartigan, Beazley
“Investors in incumbent markets will be more likely to back them to write more business if they show they can do it profitably.”
He said that Beazley has invested a lot in helping clients better understand secondary perils, such as wildfire. He said the result can be a reality check. “Secondary perils need to be closely assessed. Losses have been growing and we need to realign our thinking. They are complex but they have to be priced in and people have to accept that.”
Overall, he says, Beazley anticipates a 10 percent further gain on rates this year, which will take into account inflation and increased risk. He also thinks many clients will grow by around 10 percent. He is less interested in seeking new business—rather, he wants to support its existing clients.
“We expect more demand so we want to serve our clients,” he said. “Our growth will be aligned to the rate environment and very client-focused.”
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