EDITOR’S LETTER
Grappling with New Year’s resolutions
“Buoyed by an influx of capacity, new technologies and improving rates, MGAs are enjoying a confident period.”
After what has been another colourful year for the re/insurance industry, with yet more cat losses and many other challenges, the industry moves into 2022 in a reflective mood. At almost any other point in the industry’s history, this would be a good time to be in the risk transfer business.
Rates are hardening, demand is strong, and this has always been when the industry has made its profits.
Not so much at the moment, however. More ‘unmodelled’ cat losses have battered the industry while rising loss costs mean that claims in all parts of the business are rising incrementally—and those are only part of the industry’s problems.
There is also an increasing uneasiness around the impact of climate change on losses going forward—a challenge the industry could be grappling with for decades to come.
Put simply, rate increases are good, but they can look almost meaningless on the back of so many years of annual decreases. Combine that with higher expected losses and the industry increasingly fears that the real correction needed is much greater than clients and cedants will currently stomach.
With this backdrop, it is little surprise that so many of our interviews in this issue—again—focus on these challenges. Just how the industry copes with higher claims, caused by climate change and other factors, remains a central theme for the industry.
Yet there are many positives also to consider. Certain segments of the industry are very bullish as they move into 2022—and we focus on two such sectors in this issue.
First, an engaging roundtable discussion on the managing general agent (MGA) market offered much food for thought. Buoyed by an influx of capacity, new technologies and improving rates, MGAs are enjoying a confident period at present.
There are challenges, as ever, but a sector which is traditionally a hotbed of entrepreneurialism remains upbeat and an exciting place to be.
Another sector enjoying solid growth and innovation at the moment is the legacy or run-off space. Now a mainstream and accepted part of the strategic armoury of carriers, the sector is naturally adapting, growing and attracting new capital as it looks to service this demand. We enjoyed a robust discussion on the health of this sector, reported on inside.
With all this in mind, as we move into 2022 and the 1.1 renewals are finally wrapped up, the industry might wish to consider some New Year’s resolutions.
That old favourite—underwriting discipline—would again be a good one, but given the present changing climate, it is very possible that no-one knows what that really means.
Wyn Jenkins is managing editor of the Newton Media insurance group
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